Underlying Support Keeps Bears From Gaining Traction
Thursday's was a good-bad stock market.
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There is plenty of poor action in th stock market but the underlying support is still holding.
The bad news is that the major indices and the Magnificent Seven ended the trading session on Thursday with losses. They continue to look sluggish and lackluster, and the AI sector is still a mess with little clarity. Many stocks have already fallen into bear markets, but they are well hidden by the indices. We are actually well into corrective action, although the indices don’t reflect it very well.
Finding Breadth in the Small Caps
The good news is that there is underlying support that is preventing the bears from gaining traction. The Russell 2000 (IWM) finished with a gain of 0.24%, and the chart looks pretty good as it consolidates over the 50-day moving average. Buyers showed up and pushed breadth up during the day, with about 46% of stocks in the green. There are some pockets of strength in smaller stocks but it is not very broad.
Waiting for the Washout
The dip buyers are still out there and there are plenty of folks looking to buy weakness.
This is not a market where there is panic selling and a high level of misery. The primary emotions at work are annoyance and impatience. What we may need is some sort of negative headline to give us a quick washout. Let the bears declare victory, and then we can get back to work finding the many good stocks that have positive business prospects.
CPI and the Political Fed
We have the CPI report that may be just the sort of negative news that we need to help clear the air. It is likely that some of the poor action on Thursday was caused by concern about CPI and the fact that the Fed seems more overtly political than ever.
The Game Plan
I remain optimistic about the many opportunities that are developing, but I don’t expect this market to make it easy. Navigation is extremely difficult right now and good fundamentals are not being rewarded. It will eventually change, but it will require patience.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
