A big gap-up open to start the week is causing some consternation. Traders are hesitant to chase the indices even higher after the run they have enjoyed recently, but what do you do with all this idle cash that is sitting on the sidelines? Many market players still believe that the run off the March lows is just a very large counter-trend bounce in a bear market, but this move has surprised even some of the 'don't fight the Fed' bulls.
Breadth is running about 6 to 1 positive which is an indication that this is primarily index driven action rather than stock picking action. Virtually everything is trading higher and even the financials are finally showing some life as they are about the only sector left that hasn't participated recently.
My game plan here is to focus more on stock picks than indices. The indices are too frothy to suggest that they can keep on running but I'll look to individual stocks for opportunities. You need not be a rip-snorting bull to still find some stocks that look pretty good on a technical basis.
Two names on my watch list this morning. First is GAN Ltd. (GAN) which is my Stock of the Week. This is a 'Software as a Service' (SaaS) play in the gambling sector and it looks to break out of trading range that has formed over the past three weeks. A second name of interest is Trillium Therapeutics (TRIL) which is developing an attractive pattern.
There are folks anxious to try to 'fade' this strength but there appears to be some support so far. A gap up open and immediate reversal isn't nearly as simple as it sounds.