The Action in Individual Stocks Is Healthy

Small-caps are leading and that is further confirmation that the stock pickers are increasingly interested in the market.

Stocks continue to consolidate gains for the fourth day in a row. There was a slightly negative bias the last two days but the action today is more positive with better breadth and gains in the indices. This continues to be very productive action for the indices as it sets up a good base for a move through recent highs.

Technically it is similar to a cup-and-handle pattern but the pullback and the bounce in the last few weeks is much steeper than typical. It is more a beer stein than a cup but the handle part of the formation is developing well. Typically it is better if there is a little drooping in the handle portion and there is some of that.

The main reason I'm leaning toward an upside resolution of this action is that the action in individual stocks is healthy. There are some big cap leaders like Disney (DIS) and RH (RH) , and there is some good action in recent IPO's like Revolve (RVLV) and CrowdStrike (CRWD) . Small caps are leading and that is further confirmation that the stock pickers are increasingly interested in the market.

We'll see how this Beer Stein with a Handle pattern resolves itself. At the moment it looks promising for the bulls but this market has been increasingly choppy and a poor close will shift sentiment quickly.

I've added some Disney today and am digging for more places to put cash to work.

(Disney is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells DIS? Learn more now.)

At the time of publication, James DePorre was Long DIS, RVLV.