A big gap up open this morning caught quite a few market players by surprise, which is helping to create some underlying support. There is some chasing, but many underinvested bulls are hoping to add to positions on pullbacks at this point.
Breadth is running a little under six to one positive, but there are less than 100 stocks at 12-month highs as the recent correction for most leading stocks has been quite sharp.
The S&P 500 is right at resistance at its 50-day simple moving average, but the Dow Jones industrial average and small caps on the Russell 2000 fund (IWM) are outperforming. Although the FATMAAN technology names are positive, there are signs that the rotation into secondary names is continuing. Special purpose acquisition company names like Forum Merger (FMCI) and Tortoise Acquisition (SHLL) continue to attract interest and there is good buying in a number of smaller stocks.
So far this morning, I've been a net seller, as I reduce some of my bigger positions into strength. I'm definitely not bearish, but I'm not seeing many new entry points at the moment. There are a number of stocks I would like to add, but with small caps up about 4% since Friday morning, I'm not too willing to chase at this point.
Keep an eye on the intraday lows. If the opening lows are breached that should trigger a little more profit-taking. Most stocks I'm looking at need some time to set up better, so am I being patient.