The market recovered well after overnight weakness in the futures, but traders have been consistently burned recently with early buying, so they are hesitant so far this morning. Breadth is running strong at around 2 to 1 positive, but they are mostly smaller moves, and there is little desire to chase.
The primary positive right now is a bounce in bonds. The 20+ Year Treasury Bond Fund (TLT) has recouped the last two days of losses and is looking much better going into tomorrow's CPI report. Worries about inflation and interest rates have been the primary negative narrative lately, and there are signs that are being priced in pretty well now.
I continue to hold high levels of cash and am itching to put some to work, but we still aren't getting much positive price action. The charts are developing, but they do not see enough strength to make me believe that the upside will be sustained. It is coming, but we have to wait for it.
I've recently mentioned Standard Lithium (SLI) , and it is up nicely today and some preliminary estimates. I like the lithium theme on the growth of electric vehicles and will stay with it.
One new buy this morning was ZIM Integrated Shipping (ZIM) . We had a great trade on this back in September, but I have been on the sidelines after it topped. Last night another shipper, Matson (MATX) , posted a very strong report, which bodes well for ZIM. ZIM is a cash machine right now due to demand for shipping and is trading with a trailing P/E of 3. The bear case is that this surge in shipping can't last for long, but even if it doesn't, ZIM is just too cheap to ignore. The company is likely to buy back shares, and the numbers are likely to be even higher than the huge estimates that already exist.