The bears had an early edge this morning following worse than expected retail sales numbers but the dip buyers provided support, and then a tweet by President Trump that he was delaying tariffs on European auto imports sent the indices sharply higher. Suddenly the bears were scrambling to reposition and the underinvested bulls were looking for some long exposure.
Most of the big upside moves lately have been a function of the market catching folks leaning to the downside. When the downside momentum suddenly evaporates they send the market sharply higher when they try to adjust positions and get in synch with the action.
This morning I discussed how the negative narrative has been gaining traction lately but the price action is still quite hopeful. We are now seeing why it is so important to focus on price action rather than the negative arguments. When the bears have great arguments and high levels of conviction, they can still end up serving as fuel for the market to move higher.
I was quite pleased with my high level of cash this morning but it leaves me with little to sell into this strength. I'm being very selective with new buys and it is tough to get money to work. A few things on my radar this morning include Zscaler (ZS) , Axsome Therapeutics (AXSM) , Tufin Software (TUFN) , Enphase Energy (ENPH) and Twitter (TWTR) .
I'm not chasing new buys and still am concerned that the risk is to the downside. Apparently there are quite a few others that were preparing for further downside and that is why the upward spike gained traction so quickly. Price action still trumps the bearish narrative.