After the celebration over a dovish Jerome Powell on Wednesday, the bulls are a little hungover this morning. The DJIA has a decent gain but the Nasdaq is flat and the Russell 2000 ETF (IWM) is lagging badly with a loss of 0.67%. Breadth is solidly negative with 2800 gainers to 3900 losers.
Powell has nothing much new to add to his comments yesterday and market players are playing some defense this morning. The technical condition of the indices is quite good but with earnings season coming up soon there is some desire to do some positioning into the news.
Biotechnology is under pressure due to fears that the Trump administration will go after pricing. This morning the White House announced it was killing a deal that would have cost Pharmacy Benefit Managers like CVS Health (CVS) . That group is flying in relief.
The S&P 500 is now close to flat and that is likely to trigger more profit taking. Most of the corrective action in recent years has been triggered by intraday reversals such as what we are seeing this morning. It is very early but a weak finish today is going to cause some sell stops to trigger.
I'm a net seller so far and keeping stops tight. A few names like Disney (DIS) and StoneCo (STNE) still have good momentum but it is much narrower today and looks like a good time to tighten up and protect profits. You don't have be a bear to make sales and keep accounts near highs.