One of the key indicators of a healthy market is that they gain strength throughout the day and close strong. Weak opens are bought, and institutions put cash to work into the close.
There is something called the Smart Money Index or Smart Money Flow, which is nothing more than measuring the price action in the first 30 minutes of trading versus the last 60 minutes of trading. The theory was that the dumb 'retail' money tended to act emotionally at the open while the smart 'institutional' money tends to make its moves late in the day.
This theory no longer seems to work as it did in the past, but a strong finish is still a positive indicator of overall market sentiment. Fear of missing out will build on a day like we have today when the lows are hit in the first few minutes of trading.
Stocks are well off early lows, but there is still quite a bit of weakness. Breadth is running at 2600 gainers to 4800 decliners, and the number of new 12-month highs is down to around 240 since there was no gap-up open today. My list of 10% mover has expanded nicely since the open, and there is plenty of speculative trading taking place.
This sort of action requires more focus as it is narrower. You will not be bailed out of a bad trade quickly. There is still strong interest in stock picking which is the most positive thing about this market. When stock-picking stops working and there isn't much rotation, it will be my cue to be more cautious.
A few names I have moving on my screens today include (SOL) , (XL) , (DMTK) , (GBTC) , (NNDM) , (CCIV) , (GOGO) , (AQB) , (SGMO) , and (DFLYF) . I'm managing positions by taking some partial profits into strength while I continue the hunt for more entries. The character of this action still favors my bullish approach.
