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  1. Home
  2. / Investing

View These Pullbacks as Healthy Corrective Action, Not a Downtrend

The good news is that there's some dip buying support and several 'hot pockets' of strong speculative action.
By JAMES "REV SHARK" DEPORRE
Nov 17, 2020 | 11:01 AM EST
Stocks quotes in this article: WMT, HD, GBTC, RIOT, MARA, SOLO, BLNK, NETE

After a big two-day run, the indices are seeing some profit-taking this morning. Breadth is running 1800 advancers to 5400 decliners, and the number of new 12-month highs is down to around 100 from over 500 yesterday. Both Walmart (WMT) and Home Depot (HD) are seeing some 'sell the news' reaction to good reports.

The good news is that there is some dip buying support and several 'hot pockets' of strong speculative action. Bitcoin (GBTC) continues to trade strongly and that is creating some sympathy buying for secondary plays Riot Blockchain (RIOT) and Marathon Patent Group (MARA) .

Some of the EV players are still quite active with names like Electrameccannica Vehicles (SOLO) , Blink Charging (BLNK) , and Net Element (NETE)  attracting interest.

As long as there are themes like this and a focus on individual stock picking, then the pullbacks should be viewed as just healthy corrective action rather than the start of a downtrend. When the market undergoes a more correlated selloff and there is little interest in trying to find trades then that is the time to worry.

I'm continuing the hunt for short term trades but would not be surprised to see some deeper correction in the indices as speculative action cools a little. 

(Walmart is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells WMT? Learn more now.)

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At the time of publication, James "Rev Shark" DePorre was Long WMT, GBTC, RIOT, MARA, NETE.

TAGS: Investing | Markets | Stocks | Trading

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