The market was unable to generate any positive momentum out of the starting gate Wednesday despite some decent earnings news from Netflix (NFLX) , ASML Holding (ASML) , Intuitive Surgical (ISRG) , Interactive Brokers Group (IBKR) , and Procter & Gamble (PG) .
Despite the good news from these companies, it is not spilling over to the broader market, which is seeing negative breadth approaching 3 to 1. Bonds continue to act poorly, with the iShares 20+ Year Treasury Bond ETF (TLT) sitting close to new multi-year lows.
There are a few interesting pockets of speculative activity in the cannabis sector (AdvisorShares Pure US Cannabis ETF (MSOS) ) and in small oil plays, but this is primarily day-trading action rather than strong setups for longer-term plays.
One small-cap stock that I like for the longer term is Ondas Holdings (ONDS) , which is a maker of drones. It announced a purchase order today from an oil and gas company in the Permian Basin. This is a good example of a stock that I think may do well long term but needs work for the chart to improve. In a poor market, it is not likely to hold up very well due to the very thin liquidity.
The bounce try is fizzling out as I write, and overall market action looks dismal.
My best advice right now is:
1. Stay patient.
2. Make sure you are clear about time frames. This is a market for trading and not investing.
3. It is still too early to aggressively build longer-term positions.
4. Wait for charts to develop stronger support.
5. Focus on positive trends and not market bottoms.
6. Keep plenty of cash in reserve.
If you follow those six steps, you will be in great shape as this bear market eventually resolves itself.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider ONDS to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)