After a strong three-day run on central bank dovishness, the indices are resting Friday. Breadth is poor with around 2,200 gainers to 4,700 decliners and the number of new 12-month highs has fallen sharply to just over 100.
It is a summer Friday and it has been a good week for the bulls so there are plenty of market participants that are happy to do a little selling and head out early.
The important thing on a day like this is to not read too much into the action.
Typically, the bears are very quick to declare that any weakness after a strong run is the beginning of the end. It is understandable when you are on the wrong side of the market that you breathe a sigh of relief when things start to move in your direction, but this looks like just the normal ebb and flow within a larger trend.
At this point, I assume the market is in an uptrend until it does something that calls that characterization into question. That means looking for new buys and sticking with positions unless they start to break technical support levels.
A headline hit that Vice President Mike Pence says there are signs of progress on the China trade front and that has given the indices a boost. We should have a number of these headlines heading into the G20 meeting. Expectations of a deal with China have fallen quite a bit so any incremental positives are now seeing strong reactions.
I added a few odds and ends Friday morning but am not doing too much. Great Lakes Dredge & Dock (GLDD) has a solid looking chart and saw revenue growth of 44% last quarter.
Ocular Therapeutix (OCUL) had early approval from the FDA for an indication for its eye drug. The stock is in a high-level base just under the 200-day simple moving average.
Sibanye Gold (SBGL) is a South African gold miner that has struggled with a strike but has exceptionally strong earnings estimates going forward. If the dollar stays weak and the gold rally continues then SBGL has the potential for a strong move.
If the indices consolidate or enter a trading range then we should see a good environment for stock-picking. It is a quiet summer Friday, which is a good time to do some hunting for new names.
