For a while now I've been celebrating the stock-picking opportunities the market has been offering. Even as the senior indices rolled over and the FATMAAN stocks corrected there were strong charts and good price action that rewarded astute stock-pickers.
Unfortunately, stock-picking is like everything else in the market, it goes through cycles. A period of robust stock-picking is inevitably followed by a tougher period where it becomes much tougher to find names that are moving on their individual merits.
The big drop Monday marked at least a pause in the great stock-picking. If you trade larger-cap stocks, you may feel differently as the big-cap technology names are finally acting better, however, the trading is much narrower and mostly in names that have struggled for a few weeks.
Generally, there are two types of markets: index driven and stock-picking driven. Currently, we have a mix of the two as a rotational correction takes place. In an index-driven market stocks tend to move in a correlated manner. That was the case with the technology sector for a couple of weeks while other areas were not at all correlated to the indices.
Stock-pickers may simply have needed a rest after a very strong period. I expect that as earnings season approaches and we work through a seasonally weak time of the year the stock-picking will improve once again, although it looks like we are going to go through a dry period. That doesn't mean there aren't good picks to be found. We just have to look harder to find them. I'm not rushing to make any new buys today.