Quite often the day in front of a three-day weekend tends to have positive sentiment. Maybe it is because folks are looking forward to the break or maybe it's just a self-filling prophecy, but there is typically some good action in individual stocks even when the indices aren't doing much.
Friday was one of those days. There was mixed action in the indices with breadth running about 3,400 gainers to 4,000 decliners but some excellent movement in some individual stocks. Two names I've discussed quite a bit -- Inseego (INSG) and Ocular (OCUL) -- traded very strongly on no news. There wasn't any obvious reason for the action other than traders were looking for some action.
The good news is that following a big gap-up open on Monday, the indices have been mostly flat. It has been good trading range action and the setup is for a resolution to the upside. There is still some formidable resistance but the bears have been confounded by the positive sentiment for a while and that may well continue.
On the other side of the equation, the bears are ready to proclaim that the counter-trend rally in the face of some spectacularly ugly economic numbers cannot last long. The economic issues have been shunted aside as optimism about reopening the economy has built, but the economic reality is not going to suddenly disappear.
It should be an interesting battle. The one thing I know for sure is that very few folks have done a good job of predicting what this market is going to do next. The best course of action has been a reactive approach and that is what I plan to do. Up, down or sideways -- it doesn't matter. We will find good opportunities regardless.
Enjoy the Memorial Day weekend. I will see you on Tuesday.