Traders were a little anxious for holiday festivities. Many of the prime trading candidates gapped up too much and are seeing some profit-taking as a result. After the rally since the election many stocks are just too extended for a "gap and go" start to the week.
The indices are reversing sharply, which is causing some short pressure to be released. Bears have been waiting for weakness before they press their bets and they are now hoping that the gap-up failure will be the catalyst. The small-caps have been the leader so the Russell 2000 ETF (IWM) will be the primary focus of the market timers.
As I mentioned in my opening post I'm focusing on the oil and gas sector. United States Oil (USO) is at the highs of the day but the small-cap oils were chased too much to start the day and triggered profit-taking. I don't think that trade is over and I'm looking to play names such Resolute (REN) , Halcon Resources (HK) , Evolution Petroleum (EPM) , Comstock Resources (CRK) , SAExploration (SAEX) , etc.
I'm also keeping my eyes open for other holiday trading candidates such as Health Insurance Innovations (HIIQ) , China Natural Resources (CHNR) and GLU Mobile (GLUU) .
My Stock of the Week, Western Digital (WDC) was hot out of the gate but the strength was sold. Chasing Monday morning gaps is always dangerous.
Things should start to calm down and the stocks of interest will become more evident. There is some good speculation developing for aggressive traders.
