We have some mild action Tuesday morning with breadth running 4-3 positive but the selling is slowing picking up as traders are not finding much momentum to chase. While there is no rush for the exits and there are over 300 stocks at new 12-month highs there are signs of consolidation.
Financials are weak and money is rotating back into precious metals. I've remounted a few names such as First Majestic Silver (AG) and Kinross Gold (KGC) . I'm eyeing a few other remounts as the action develops.
I've accumulated quite a few smaller positions lately and I'm doing some pruning today -- not because I'm bearish but so that I can sharpen my focus. I often take tracking positions and end up with quite a few when there is so much strong action in small-caps. I start to lose track of them when I have too many so it helps to shorten my watch list when the market looks like it may be ready to consolidate a little.
I also tend to reduce positions into earnings reports. Many of the smaller stocks I favor have not reported yet and I'm cutting them back. A good example is Inseego (INSG) , which has had a healthy run and is due to report after the close Wednesday.
Some pullbacks and a pause would be very healthy technically for the overall market. However, you can bet that the bears will be declaring that a major top is forming as soon as there is even some minor weakness. While we want to make sure we protect gains, it is easy to be too bearish too quickly when we have enjoyed a big run.
There continues to be some good technical action in individual stocks and I'm a buyer as long as I find setups. I see no reason to spend any time trying to predict what the indices will do next. The stocks on my screen will tell the story.
