• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Frustration Levels Are High, but This Is Constructive Market Action

Strong markets tend to stay sticky to the upside, and the mild pressure on the indices isn't preventing some good stock picking.
By JAMES "REV SHARK" DEPORRE
Nov 22, 2019 | 07:23 AM EST
Stocks quotes in this article: HD, KSS, TGT, SMH, AMAT, KLAC, PING, ESPR, DDOG

Although the S&P 500 has been down three days in a row for the first time since September 24, the weakness has been quite mild and is not suggestive of a market top. On the contrary, this looks more like healthy consolidation and profit taking before another possible push higher.

There are some issues with the underlying action. Breadth has not been strong and the number of new 12-month highs is at very low levels for a market so close to lows. There has been some particularly weak action in sectors like oil and cannabis, but it has spread. Retail was hit on some poor reports from Home Depot (HD) and Kohl's (KSS) , but Target (TGT) helped to offset.

One group that needs to be watched closely here is semiconductors (SMH) . There were several 'sell' recommendations in the sector yesterday, including Applied Materials (AMAT) and KLA (KLAC) . The sector closed at its lowest point in 14 trading days. Chips have often marked a turn in the market and if they continue to see pressure and further lows, it may warrant a reaction. The good news is that the negative sentiment has not spilled over into other areas of the market, so far.

I've often written that strong markets tend to stay sticky to the upside. They don't just suddenly collapse unless there is a surprise news catalyst of some sort. Last fall, the turn in the market was triggered when the short volatility trade suddenly blew up. There isn't any issue like that on the horizon right now, although many market players seem to think the China trade issue could send the market into a tailspin should it fall apart again.

In one statistical study by QuantifiableEdges.com, the market is shown to be higher over 80% of the time two or more weeks later after closing over its 10-day moving average for 25 days in a row -- and then dips for one day. That is the current situation with the S&P 500 now. In 15 previous cases, the market was higher 14 times, 18 days later.

Statistical studies of this sort show general tendencies and are not guarantees. Market conditions are never exactly the same. The easiest way to suffer big losses is to put too much reliance on this sort of data.

There are plenty of other ways to look at the current technical patterns in this market and be far less positive. That is why I constantly preach that we should be reactive rather than anticipatory.

The good news is that the mild pressure on the indices isn't preventing some good stock picking. It is narrow and there aren't many themes or good leadership, but if you are selective with names like Ping Identity (PING) , Esperion therapeutics  (ESPR) , DataDog (DDOG) , etc., there is opportunity.

My game plan remains the same. I'm carrying a high cash balance and I'm looking hard for new names and additional entry points. My biggest problem lately has been finding places where I can aggressively deploy my capital. On the other hand, I'm keeping my accounts as close to highs as possible and have been finding some profits. Until there is a shift in price action, I'll stick with what I'm doing.

We have a positive start to the day and a complacent feel in the early going.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Rev Shark was long PING and DDOG.

TAGS: Indexes | Investing | Markets | Stocks | Trading | U.S. Equity

More from Stocks

It's a Mess Out There

James "Rev Shark" DePorre
Apr 19, 2021 4:26 PM EDT

Let's see how the market reconciles some of the most significant divergences in many years.

Jim Cramer: The House of Pain Stocks vs the House of Pleasure Stocks

Jim Cramer
Apr 19, 2021 4:05 PM EDT

Amazingly, one group isn't just left behind, it just keeps losing money, while the other group is shrugging off this day with aplomb.

Are We Seeing an Interim Top in Copper?

Bruce Kamich
Apr 19, 2021 3:04 PM EDT

Dr. Copper is back to levels not seen since 2011.

Lithia Motors Could Correct Before Making New Highs

Bruce Kamich
Apr 19, 2021 2:15 PM EDT

Consider a correction to be a buying opportunity.

The Market Has Been Forgiving for Way Too Long

Timothy Collins
Apr 19, 2021 2:09 PM EDT

At some point, the momentum and frothy traders will return, but the current action should be a solid lesson.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:05 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How recency bias and the Pareto Principle impact y...
  • 02:42 PM EDT PAUL PRICE

    Wednesday on Real Money Pro

    Make this stock a 'part' of your portfolio.
  • 04:44 PM EDT PAUL PRICE

    Pretty Incredible + Hard to Believe

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login