The indices gapped higher to start the day primarily due to an automatic positive reaction to oil. Oil has been under severe pressure recently primarily due to concerns about economic slowing so any increase in oil prices is viewed as a signal that maybe there is stronger economic demand.
Unfortunately that is how computer algorithms are programmed. The fact that oil is up on an attack of tankers in the Middle East is not nearly as positive and that is why the early strength is being sold. The question now is whether some support will kick in before the early gap is filled.
Breadth is running nicely positive with about 4700 gainers to 2000 decliners. New highs are not expanding with just around 140 at the moment. Retailers are helping out the bullish cause and the bounce in oil is helpful also.
I've been holding high levels of cash recently mainly as I've found few technical setups that I want to buy aggressively. I'm finding some decent trades but my time frames are short. Revolve (RVLV) for example, which I mentioned on Monday, continues to look quite good. Amarin (AMRN) is poking its head out of a base.
One interesting small cap name on my radar this morning is Coda Octopus Group (CODA) . CODA sells underwater technology that is used for imaging, mapping, defense, surveying and other applications.
The company announced earnings this morning. Revenues were up 92% over the same quarter last year at $6.8 million and it earned $0.18 per share versus a loss last year. MarketSmith shows EPS growth of 31% for the next two fiscal years ending in October. The stock sells with a trailing PE of just 12.
I added shares this morning and will be looking for more entry points as it develops. The stock had a great momentum run earlier in the year and I expect that the momentum players will return.