• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

A Day for Resets

I'm more inclined to do strategic buying in this sort of market action rather than more aggressive selling.
By JAMES "REV SHARK" DEPORRE
Jan 21, 2021 | 01:08 PM EST
Stocks quotes in this article: SOLO, FUV

Strong uptrends require some pullbacks, consolidations, and resets as they continue to work higher, but it is important to distinguish between the indices and individual stocks. This has been a great market for stock picking recently, and we are now seeing some 'resets' in the individual stocks that have performed best while the broader market experience sharp rotation.

What is most notable about the action is that the S&P 500 and Nasdaq are flat to up while breadth is quite poor at 2 to 1 negative. Many individual smaller caps are resetting while a small group of big-caps that have lagged are finally playing catch-up.

The challenge of this market action is that it is very easy to believe that the weak action is the start of a much deeper correction rather than just a healthy reset. It can be quite difficult to tell the difference between just a routing pullback and something more serious.

The key 'tell' is the intensity of the selling. Are market players selling into the drops without regard to fundamentals or chart patterns? Is there the aroma of fear wafting in the wind? It isn't easy to say in most cases, but when there is highly correlated selling, and bounces keep getting sold, then it's time to use more caution.

So far, this action looks like healthy consolidation to me. That doesn't make the pullbacks less painful, but I'm more inclined to do strategic buying in this sort of market action rather than more aggressive selling.

One name I just added is Electrameccanica Vehicles (SOLO) , which makes 'cute' three-wheel electrical vehicles. The company is opening retail outlets, and the first sales are starting to occur. A similar stock, Arcimoto (FUV) , is breaking out today, and I'm looking for SOLO to follow.

The indices are losing steam again, and breadth is weak, but I'm calling it a reset at this point and am not too concerned.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, James "Rev Shark" DePorre was Long SOLO.

TAGS: Investing | Markets | Stocks | Trading | Electric Vehicles

More from Investing

Bumble, Let's Just Be Friends for Now

Bruce Kamich
Aug 9, 2022 12:29 PM EDT

BMBL has a date with earnings on Wednesday, and the charts say investors should refrain from flirting with the stock.

The Bullish vs. Bearish Narrative on the Market

James "Rev Shark" DePorre
Aug 9, 2022 11:23 AM EDT

The CPI report Wednesday is going to cause a more careful examination of inflation, a hawkish Fed, and a potential recession.

I Don't Have Much of an Appetite for Red Robin Ahead of Earnings

Bruce Kamich
Aug 9, 2022 10:45 AM EDT

The restaurant chain reports quarterly numbers Wednesday.

GlobalFoundries Is Red Hot: Here's the Trade

Stephen Guilfoyle
Aug 9, 2022 10:30 AM EDT

GFS topped an excellent quarter with strong guidance.

Fight the Rally, or Fight the Fed?

Ed Ponsi
Aug 9, 2022 10:30 AM EDT

That's the big question facing market participants, and here is a key stock index point to watch to see which side to take -- plus a steelmaker trade to consider.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:24 AM EDT PETER TCHIR

    Jobs Report Reaction: Incredibly Strong, But Questions to Ask

    An incredibly strong July jobs report. Not only d...
  • 08:54 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The Secret to Dealing With FOMO
  • 03:51 PM EDT REAL MONEY

    AMD Second-Quarter Earnings Live Blog

    Real Money's Eric Jhonsa covers 's second-quarte...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login