The market is taking a rest after the highly chaotic action of the last few trading days.
The indices are trading flat to down but breadth is running around 3900 gainers to 3200 decliners and there are few stocks making new highs or lows. FAANG names -- Facebook (FB) , Amazon (AMZN) , Apple (AAPL) , Netflix (NFLX) and Alphabet (GOOGL) -- are mixed and there aren't any major themes at work. It actually looks like what we'd normally expect during a slow holiday period.
While it may be peaceful now, watch for action to pick up this afternoon as trader speculate about whether we will see another late day surge due to program trading. On both Wednesday and Thursday the program trades kicked in right around 2.30 pm ETF and I expect that there will be some traders looking to front run the possibility of another surge.
One of the benefits of the quieter trade is that some individual stocks are starting to perk up and show some potential for outperformance when the market chaos cools off. Many of these are suffering from tax selling pressure but that is starting to lift now that the year is ending. One group in particular that may be ripe for some bounce is biotechnology which has suffered far more than most other sectors in this market correction.
Some of my favorite stocks in the year ahead are biotechnology names that have been pounded. I'll discuss them in more detail next week but a few on my radar include Sarepta Therapeutics (SRPT) , Aimmune Therapeutics (AIMT) and Viking Therapeutics (VKTX) .
The key to these plays is obviously timing, but with the calendar rolling over the potential for some bottom fishing is improved. If the broad market stays under pressure these stocks will not work but when stock picking shows signs of life again, the biotechnology group will be a good hunting ground.