Hopeful notes about a China deal from both President Trump and China State Media is helping to bring in buyers that are chasing the indices for the third straight day.
Those headlines are a convenient excuse but what is most interesting about the action today is a spike in the speculative action. This is not just a market of oversold bounces now. There is some very strong pockets of speculative action with groups like biotechnology, shipping, China small caps and chips coming to life. Some of the stocks that have been struggling for the past month are suddenly finding some interest.
I've been yammering lately about how the return of stock picking is that best sign that the market has returned to health. That is what we are seeing today. This is not the highly correlated movement that dominated during October. Market players are seeking out specific stocks that may have better prospects than others.
I don't want to sound too positive as we are running into a couple big events after the close - Apple (AAPL) earnings and the jobs report - but when stock picking comes to life it usually continues for a while. What I'd really like to see now is some flat action in the indices which forces traders to gravitate toward a smaller selection of stocks that are working.
The stocks that were the first to correct back in late September are the ones that are leading now. That bodes well for the broader market but this is not the time to be overconfident.
SELLAS Life Sciences (SLS) , which I mentioned earlier today, and Viking Therapeutics (VKTX) , which has been a recent favorite, are both acting well. I'll be looking for more ways to put cash to work.