Despite headlines about growing tension between China and the U.S. over trade, the market is enjoying some standard trading range action Friday. There is some movement on the news flow but it is quickly dismissed as the focus shifts back to the price action.
Breadth is running close to even and there are very few stocks hitting either new 12-month highs or lows. Most notably the FAANG names are weak with Apple (AAPL) down more than 2%. On the other hand, biotechnology stocks are seeing some bounce action and small-caps (IWM) are enjoying a bounce of 0.8%.
This is trading range action and it is primarily stock-picking that is being rewarded over trying to discern market direction. One of the major themes recently has been the outperformance by the post-pandemic names in groups such as biotechnology and technology but the FAANG names seem to have become rather frothy and now there is some selling in that group.
I'm focused on trading in some smaller names that have indicated that Covid-19 is not having any major impact on their operations. Ocular Therapeutix (OCUL) , Baudax Bio (BXRX) and Schrodinger (SDGR) are all biotechs with promising products that will be able to do well as soon as the economy reopens.
One new name I added today was Lantronix (LTRX) , which focuses on products that allow remote access. The company reported 34% revenue growth and expects to see sequential growth in the next quarter.
The action that is favoring stock-picking right now. The S&P 500 has some clear overhead resistance and is still developing some underlying support. Rather than focus excessively on market direction, the better approach is to find individual stocks that working.