There isn't nearly as much emotion today, but the indexes are doing a nice job of building on yesterday's intraday turn.
Breadth is very strong with over 5,000 advancers to 1,700 decliners. There are 120 new 12-month highs to 80 new 12-month lows, which signals that we are in the middle of a trading range for now.
Bounces after a sharp decline like we have suffered recently usually gain some momentum, because of the buying power that was created by some panic selling. Investors are worried about missing out on the move back to new highs, and many are anticipating a V-shaped move. Those V-shaped moves have been the norm, rather than the exception, in recent years, and traders are aware of that.
The big difference in the market right now is that there is a tremendous amount of concern among pundits and strategists that the market is on the brink of a major shift. I can not remember at any time in my trading career when a turn has been more anticipated.
Maybe all the bearishness is a contrary indicator that will trap the anticipatory pessimists, but there is good reason to move with caution.
My game plan is to ignore the big picture pundits and stick with the action in individual stocks. There have been some pockets of trading that are insulated from the macro movement, which indicates that there is still strong speculative behavior.
I'm looking at a few buys such as Recro Pharmaceuticals (REPH) and Sea Ltd. (SE) , but I have very high cash levels and am managing trades tightly.
There are good odds for continued upside, but downtrends are a function of failed bounces, and if this one fails, it is going to have a profound impact on sentiment.
