Overall market action is poor on Monday morning as profit-taking kicks in after a strong run. The Goldilocks economic scenario is losing steam as concerns build about a more hawkish Fed, which is ending the short squeeze and FOMO that drove the action for much of January.
The good news is that there are some interesting pockets of speculative trading. Breadth is poor at around 3 to 1 negative, but small traders are very aggressive with themes such as Artificial Intelligence. Some of the stocks in the group that are making big moves include C3.ai (AI) , SoundHound AI (SOUN) , Quantum Computing (QUBT) , Remark Holdings (MARK) , and Veritone (VERI) .
Earnings season is winding down for many of the large-caps, but it hasn't even started yet for small-caps, and that will produce some interesting speculative action. There are a number of stocks that I'm watching, such as Beyond Air (XAIR) , which I've discussed here, and Sensus Healthcare (SRTS) , for run-ups into their reports later this week.
My Stock of the Week is Dole plc (DOLE) . I picked DOLE because it is a defensive play that I believe will hold up well should we have more difficult market conditions. It is not going to be a fast mover, but it has a dividend and a solid valuation.
What is most interesting about Dole is that it sold a money-losing vegetable division to Chiquita, which also reduces debt and should produce strong earnings in the months ahead. I expect management to increase guidance when it holds its conference call next month.
The indexes are hitting intraday lows, as I write this, and we are starting to see more correlated macro-driven action to the downside. The appetite for speculation is still there, but time frames are going to shorten if there is pressure on the indexes. Small speculative traders will fight the trend for a while, but they have poor staying power when the overall market struggles.
The market needs to consolidate recent gains, and I like the way that many charts are developing, but we are due for some downside, and there isn't much nearby support for many names.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider several of the names mentioned here to be micro-cap or small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)