The indices are trading down slightly this morning but breadth is running 3-4 negative and there are more new 12-month lows than highs. The momentum that drove this market for over a week has fizzled out and now stocks are regrouping as they look for the next catalyst.
At this point there isn't much choice but to stay patient and wait for some clues as to the market mood. The best thing that could happen at this point is some trading range action that allows charts to consolidate. We have been in an environment that has been largely macro driven lately due to the major headlines. Small caps have lagged and individual stock picking has not been rewarded.
Trading range action tends to favor stock picking as traders gravitate toward the stocks that are exhibiting the best relative strength. When the market is macro-driven it is the ETFs and indices that dominate and cause stocks to move in tandem.
I've doing very little right now as I simply don't see setups that will lead to sustained momentum. There are a few stocks on my radar like Revolve Group (RVLV) and Kirkland Lake Gold (KL) but it is a very thin market for stock pickers right now.
This is just part of the cycle and it will shift but it is slow going and the best move is to wait for some movement before you do much. This is a market where forcing trades is not going to produce very good returns.
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The rail car maker is likely riding into a slower period of demand for its products, which investors should keep in mind when considering it as a dividend play.
Our three charts suggest weakness could loom ahead, so hold off on buying stock.
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