Watching Opportunities -- and Landmines

Strength in the DJIA is covering up some less robust action under the surface. Good earnings from Caterpillar, Inc  (CAT) , 3M Co  (MMM) and McDonald's Corp  (MCD) are driving the senior index to a gain of 0.76%, while the other indices trade with small gains. Breadth is solid, with about 3300 gainers to 2150 decliners, but there are some notable pockets of weakness in biotechnology and some of the recent small-cap momentum movers.

This action is a good example of what I discussed in my opening post, which is that there are far too many market players anxious to buy dips at this point. Pullbacks are opportunities, not warning signs, and it is going to take a while for that thinking to shift.

A few things of interest on my radar this morning are Lumentum Holdings Inc  (LITE) , which reacted very strongly to news that the results from an industry-related German company bode well for its 3-D business. Nutanex (NTNX) is breaking out on low volume -- and I'm looking to add there. I continue to average into Qudian, Inc  (QD) , which I believe is overreacting to yesterday's news. That should have some strong initial coverage in a few weeks and I'll be looking to the position further as it develops. Overstock (OSTK) is my top blockchain play and I'll be watching for more entries there.

Stock picking is becoming much more challenging. But with many of these companies reporting very soon, there are good opportunities -- but plenty of landmines as well. At least the market is seeing some increased volatility, which makes things more interesting.

At the time of publication, Rev Shark was long NTNX, QD and OSTK, although positions may change at any time.