Small caps are leading and breadth was running positive but is now negative with 3400 gainers to 3600 decliners. The Nasdaq is lagging with a loss close to 2% after leading yesterday.
Despite the solid intraday reversal yesterday, it is not helping to produce follow through to the upside today. The fact that breadth isn't terrible tells us that there is more interest in stock picking but it is comprised mostly of oils bouncing back from a pounding. Positive momentum continues to be nearly impossible to find.
The overall market still looks extremely poor. The one positive is that yesterday's lows have not been breached but this give back is substantial and that is not healthy. Market players simply don't have much trust and they are worried about holding positions over the weekend.
Interestingly, there isn't any major negative news. There is the endless back-and-forth over China Trade but it looks like it is more an excuse for programmed selling more than anything else. Bonds are holding up but one major change is the weaker dollar. That is causing the best action in gold in some time.
My main gold play right now is Kirkland Land Gold (KL) which is close to testing its August highs and has had exceptional relative strength over the past couple weeks. The SPDR Gold ETF (GLD) also continues to improve.
Real Money's Stock of the Day - Facebook (FB) - is a good illustration of the condition of many stocks right now. The price action is poor and there is no reason to believe that it can gain any upside momentum in the near term. The bulls and bears can battle back and forth about fundamentals and valuation but the stock is doing nothing and that is all that matters in my book. When it breaks the downtrend that has been in place since its second quarter earnings report we can look at it again but it's dead money at present.
I'd really like to put more money in some individual stock picks but it just isn't happening yet. Action like we are seeing today just is not the right platform for putting more capital at risk. The goal is to buy stocks when they have the best chance of sustained upside. That does not appear to be the case at present.