It is only Monday, but we had a good example today of the sort of action that traders look for around the holidays. Volume was light, but there was an upbeat atmosphere all day. Breadth was extremely strong and the number of stocks hitting new highs was in excess of 750 names.
I discussed this morning that the rotational action suggested that oil, commodities and materials stocks might be favored groups, which turned out to be the case. Small-cap oils like Resolute Energy (REN) and Comstock Resources (CRK) traded very well.
In addition, the FANG names did well. Amazon (AMZN) , in particular, was strong and Facebook (FB) benefited from a buy-back announcement. A few of the chip stocks weakened today, but selling overall was quite contained.
The problem we face is the same one we faced last week. The market is overbought and not offering easy entries, but there are no indications of a top. This is the sort of momentum that drives market timers crazy, and it is even more difficult with thinner trading around the Thanksgiving holiday.
News of an earthquake in Japan is hitting after the close and that is having a slight impact, but we had a last-minute, machine-generated spike so the impact is limited so far.
I'll be looking for some follow-through in the oil group tomorrow, but the air is becoming very thin up here, and we have to stay extremely vigilant. If this market finds a convenient excuse for selling profits can dry up quickly.
Have a good evening. I'll see you tomorrow.