The action is mostly negative today as market players deal with poor earnings, weak breadth, and limited rotation. While Amazon (AMZN) has had a limited recovery after its poor earnings, the Nasdaq 100 (QQQ) has managed to bounce back fairly well, while the Russell 2000 (IWM) lost its pearly luster and is now trading down 0.6%.
The rotation into growth and small-caps just can't seem to gain much traction, although there has been some good catalyst in the form of disappointing earnings in the FATMAAN names. Traders just aren't willing to aggressively buy these stocks yet, although there is some decent support levels building.
The obvious concern is that a correction in the senior indices will drag down everything. That worry is what is keeping money on the sidelines. While rotation into some of the names that have been hit hard does make sense, the problem is that overall market sentiment will likely keep some folks on the sidelines while waiting for the indices to pull back.
The best thing that could happen is a correction in the major indices that leads to a shift to stock picking. It just hasn't developed sufficiently to produce some sustained rotational action.
I continue to monitor quite a few stocks that I feel will eventually perform well, but there isn't much to do until they exhibit better price action. We have quite a few earnings reports in the next two weeks that will offer some short-term volatility, but there still is no rush to build up to longer-term positions.
It is Friday afternoon on the last day of July, so it isn't too surprising that there is limited market interest today but be ready for some movement next week as more earnings reports hit and the battle over rotation continues to build.