There is an unusual mix of market action Tuesday morning, which is primarily a function of the struggle between overbought conditions and strong momentum.
What is most notable is that breadth is poor with around 2,000 gainers to 4,800 decliners but Apple (AAPL) is being chased to its highest level since early November. Apple is up 10 days in a row and the buying has been accelerating, although there isn't any specific news catalyst.
A few other large-cap names such as Netflix (NFLX) , Twitter (TWTR) and Facebook (FB) are doing well but the number of stocks hitting new 12-month highs is under 70, which is a good illustration of how narrow the strength is. My scans of the market for active stocks show only about a dozen names that are up over 5%, which is an unusually small number.
I've taken stops on some smaller-cap stocks that are drifting and not doing anything and have not made any new buys so far. The action isn't terrible but there are plenty of struggles and position trades are not working outside of Apple and few other bigger names.
I suspect the strength in Apple is primarily a function of big funds struggling to put idle capital to work. When you need to put big money to work very quickly there is no better vehicle than Apple.
I'm going to stay patient and see what develops but I do not anticipate doing much right now.