This Is the Biggest Challenge in the Stock Market Right Now

 | Dec 04, 2017 | 5:09 PM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

spy

,

DIA

,

IWM

,

crc

,

snd

Although the DJIA and S&P500 are still posting strong gains, there are pockets of 'sell the news' action. The number of stocks trading at intraday highs has dropped quickly. Financials have had a huge run but now there are some signs of profit taking there. Other groups like railroads, restaurants and consumer services have been leading but many of the key names are looking very extended now.

If you primarily play indices, you likely view this market much differently than stock pickers. The bears that are trying to short the senior indices are having a very hard time. The softness in the Nasdaq indices is not spilling over and there isn't any real 'sell the news' taking place in SPDR S&P 500 ETF (SPY) , SPDR Dow Jones Industrial Average ETF (DIA) or iShares Russell 2000 Index ETF (IWM) .

For stock pickers the challenge has been to shift from the 'buy the dip' plays that have worked so well to other sorts of setups.  I've been seeing more stocks that are coming out of bases and less pure momentum.  California Resources (CRC) and Smart Sand (SND) , in the oil sector, for example, do not have strong momentum but do have solid bases that provide support.

The great temptation of this market is to keep trying to call a top in the DJIA or the S&P500.  Both look quite extended and, as I wrote this morning, the setup for selling the tax news is quite good.  The timing is extremely difficult and it is likely that there are still plenty of computer algorithms looking to squeeze overanxious bears.

I'm focusing on setting aside timing issues and am mainly looking for stocks that have good setups and are in the sectors benefitting from rotation.

This market is not nearly as easy as you would think if you are just looking at the DJIA. There is a lot of rotation and limited momentum after the gap-up open.  Stay selective with new buys.

Columnist Conversations

Texas Instruments (TXN) announced after the close that CEO Brian Crutcher resigned due to violations of the c...
The initial upside target off the recent low comes in around the 333.51-337.71 area. Here is the updated ch...
A cup/handle is one of the strongest and most precise chart patterns out there, proven more often than not.&nb...
Today is 12 days up from the 6/28 low which is very similar to prior rallies of 11-13 days up.  This is r...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

COLUMNIST TWEETS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.