The basis for the big gap-up open Friday morning was news that indexing of China stocks would increase dramatically. While that caught bears by surprise, it isn't news that has legs. It caused some shorts to cover and created anxiety for underinvested bulls but there is a sharp reversal occurring now and the chasers Friday morning are trapped much like the bears at the close on Thursday.
This market is doing a nice job of making it tough on everyone.
There continues to be some good action in individual stocks such as Nio (NIO) , Zscaler (ZS) , Flexion Therapeutics (FLXN) , Bloom Energy Corp. (BE) , but it is a bit narrower, although breadth is better than two-to-one positive. My shopping has been expanding lately due to good technical action and a pullback in the indices would do quite a bit to enhance entry points.
I'm watching to see if this big opening gap in the indices is filled. If it is, then it is going to get the bears very excited as it is a very negative technical topping pattern. Be careful here in both directions, the market beast is particularly ornery right now.
I'm a bit distracted today after learning that someone that has been trading with me in my chatroom suddenly passed away. I only met Sal in person very briefly once, but we have been trading together nearly every day for the past 14 years.
It is easy to dismiss the emotional attachments we form with others in this business, however, this shocking news makes me realize how the personal relationships we form add to the returns we generate. RIP Sal.