We have some downside volatility here on Thursday that is making some traders uncomfortable because they haven't experienced much of it recently. Outside of the three-day correction that started on Friday, it has been an almost straight-up market. For a long stretch we didn't have any selling that lasted for a longer than an hour.
This morning the indices are down a bit and breadth is running slightly negative at around 3,200-3,600, but given the quick bounce the last two days this is perfectly normal and even healthy technical action. Some of the short- term traders who caught the bounce are taking quick gains and some of the aggressive bears are trying to time a failed bounce.
I suspect the indices will see some decent support as we await the next positive trade headline. There is a little over a week until the Dec. 15 tariff date and there is sure to be news before then about the state of negotiations.
In the meanwhile, I'm focusing on individual stocks and stalking some positions. I remounted some Aurinia Pharmaceuticals Inc. (AUPH) after selling down my position Wednesday night. One recent name I've mentioned that I want to buy on weakness is Enphase Energy Inc. (ENPH) . There are a few other small-cap names that are weak that I will be watching as well.
It will depend on the trade news, but given the current technical conditions I believe that the S&P 500 can hit another new high before the end of the year. If that happens, it should be a good environment for strategic stock pickers.