Here's Why I Just Can't Be More Upbeat About This Market
There's no choice but to be cautious when something like this happens.
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The senior indexes managed small gains on Monday, but small-caps lagged, and speculative groups such as biotechnology IBB and healthcare IXJ also lagged.
Tesla TSLA was the big-cap momentum leader, while Microsoft MSFT and Apple AAPL struggled. Cannabis MSOS names showed good relative strength, and overall market breadth was slightly positive as small-cap weakness kept it suppressed.
The notable drop in biotechnology was likely driven by funds that are playing a seasonal pattern of weakness. It was relegated to a small group of stocks on Monday, but it could spread quickly as the indexes struggled with overhead resistance and overbought technical conditions.
I have been complaining about this for a while, but the lack of good entry points continues to be a problem. That can be fixed either by more choppy and flat action or by a pullback of some significance.
Strong markets tend to stay sticky to the upside, and we are seeing an illustration of that now, but it can change very quickly as bulls become frustrated with the lack of progress. Technically, the indexes are still in good shape, but the price action is not convincing, and the problem of seasonality is lurking.
I’d like to be more upbeat about the trading action, but when I see biotechnology taking a 1.7% hit on no news and a lack of good entry points, then I have no choice but to be more cautious.
Have a good evening. I’ll see you Tuesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
