For the third day in a row, the market is dealing with intense rotation that is creating two-tiered action.
While the DJIA is up over a 100 points, breadth is running about 3-5 negative. Probably the best illustration of the action is the fact that there are around 100 stocks hitting new 12-month highs, but there are over 650 hitting new 12-month lows.
This sort of action is the opposite of a stock-pickers' market. Fundamentals and charts don't matter. Flows and liquidity drive the action. Stocks are sold as a group without any recognition of their intrinsic value.
This is extremely painful when your fundamentally solid stocks are sold for no good reason, but the positive spin is that eventually it creates some fantastic bargains.
Many of my favorite names are being hit hard, but I'm quite confident that their superior fundamentals will be recognized again at some point. The trick is finding entry points without buying into the teeth of the decline. It is very easy to average into downtrending stocks too big and fast and then make an emotional decision to sell for a loss.
I'm looking for a energetic snapback, and it wouldn't surprise me if it occurred the day before Thanksgiving, which is typically a strong day for the overall market.
This is a very poor market right now, and it is made far worse by the failure of the indexes to reflect what is happening. On the other hand, this sort of excess always leads to opportunity.