The Dow Jones Industrial Average is trading up nearly 1% and the S&P 500 Index is working on a breakout over its recent highs, but I don't like what I see on my screens and I'm concerned.
Sometimes the market is primarily driven by the indices and sometimes the market is primarily driven by individual stocks. Today is one of those days where it is the indices that are diving the action.
The individual stocks that I'm following are exhibiting little energy and small-caps, in general, are lagging. There are no pockets of strong momentum or speculative action. There are gains, but they are lackluster at best.
The group that is leading today has been the biggest laggard lately and that is the financials, evidenced by the Financial Select Sector SPDR Fund ETF (XLF) .
The FAANG names are still doing well, but the majority of strong stocks I've followed lately are barely up. I don't have any small-cap out of dozens on my screens that has a gain of more than $0.50 right now.
My approach to the market is to let the individual stocks be my primary guide. I try not to anticipate what the indices might do. I simply follow the price action and try to listen to what it says.
Today it is saying that we aren't in any rush to buy stocks, even though the indices are giving a different impression.
I'm not rushing to sell, but if a stock continues to act poorly, I'll cut it. Right now, I'm not finding new buys so that means my cash levels will increase.
I don't want to be negative about a market where the indices are doing so well, but my stocks are not confirming the strength and that is what is most important to me.
I have no interest in shorts, but unless things improve, I have no interest in buying either.