The dip buyers are very active Monday morning as they jumped on the gap-down open and pushed the S&P 500 into positive territory. However, there is still plenty of red on the screens with breadth running about 2,750 gainers to 4,000 losers. New highs are down to around 50 and new 12-month lows are up to around 40.
The biggest issue right now is that the action continues to be very slow. There are a few large-caps acting well such as Netflix (NFLX) , Medidata Solutions (MDSO) and Kimberly-Clark (KMB) , but the problem lately has been a lack of good leadership or positive themes. While there is enough strength to prevent any major technical damage, there is not enough to get this market breaking out to new highs.
What has been most notable for a couple of weeks now is the underperformance by small-caps and a paucity of good stock-picking. There are a few things that work but more speculative stocks have been tough sledding. Cannabis-related names, cloud computing and biotechnology names have acted very poor lately and there doesn't seem to be much stepping up to take their place.
The market has also had very low volume for a while now, which is contributing to the lack of good trading action. It is a self-fulfilling cycle to some extent as good stock picks need volume to attract more volume.
Is this just some routine consolidation after a big run or is it stalling action that indicates that further weakness is going to occur?
I don't know the answer to that. All we can do is stay vigilant, watch positions and see what develops. Earnings season is going help determine how sentiment develops.