The DJIA tagged the 29,000 level today for the first time ever but it was a trigger for some profit taking. The indices as well as many stocks are badly in need of some consolidation but strength in big caps like Apple (AAPL) , Microsoft (MSFT) , Alphabet (GOOGL) , and others is preventing much pullback.
While the big caps are doing the heavy lifting, it is not a terribly negative market. Small caps (IWM) have been lagging and breadth is running about 4000 gainers to 3200 decliners today but there are 600 stocks hitting new 12-month highs. The IBD leader board which is primarily bigger cap momentum names has its longest list of members ever.
The selling is picking up as I write with the S&P 500 looking to test early lows. The dip buyers keep jumping in quickly and refuse to let the selling gain momentum, but on a Friday afternoon after a good week there may not be as much of an inclination to jump in.
It is highly unlikely that the indices are going to roll over and go straight down from here. When the indices rally as they have recently it creates a big supply of buyers under the surface. All those folks that have been underperforming are anxious to buy long exposure on pullbacks so that they don't miss the next pullback. That psychology is why the dip buying is so tenacious.
Earnings season begins next week with Citigroup (C) , JP Morgan Chase (JPM) and Wells Fargo (WFC) reporting on Tuesday. There are primarily financials the rest of the week before we start seeing some of the big technology reports the following week. Small caps tend to report last and it will be interesting to see how those charts develop during the big cap reporting season.
I'm not doing too much today as I don't feel much of an edge as many stocks need some resets. InMode (INMD) which I discussed yesterday as a top pick is doing well, and my top pick for 2020, Aurinia Pharmaceuticals (AUPH) , received an initial buy recommendation today from Jeffries with a price target of $27.
(Apple, Microsoft, Alphabet, Citigroup and JP Morgan are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
