Slow and Steady Floats the Chase

Another opening gap higher in the broad market, after yet another late-day fade yesterday afternoon, is putting virtually all traders to the test this morning. While it seems as though bears may have found themselves trapped again, the major averages have yet to go full throttle to the upside and slam that trap door shut. 

In fact, as I write this I see the small caps in the Russell 2000 Index are nearly completing a gap-full below to yesterday's close. I am looking to see whether the senior indices follow suit.

In addition, note that the S&P 500 Index is still caught up in a rather choppy 2700-2750 range. Until that range is broken, it is likely correct to not lurch at each gap and fade with too much enthusiasm. Below the surface, there are some standouts but also plenty of lethargic price action, even in some sound chart setups for longs, a consequence of the indices displaying the type of indecision we have seen of late. In lieu of celebrating every gap higher and mourning each fade, we want to consciously slow ourselves down as traders and not force in trades here.

Indeed, slow and steady may not win the race right away, but it will avoid unnecessary chasing in both directions. 

MOMO, a China internet firm, is a standout, gapping up 14% to its 200-day moving average. Via techcrunch.com, "Momo, the Chinese location-based social networking app that has more recently made a big push into dating services and is traded on Nasdaq with a market cap of around $6 billion, announced that it has acquired Tantan, China's top dating app, for $600.9 million in an all-cash deal."

Tantan is China's de facto Tinder. And the market obviously likes this play for MOMO. Still, the MOMO chart needs some more time to firm up and truly turn around. 

In the meantime, Weibo is acting rather well, flagging high and tight on its daily chart, below. 

I have not been trading China stocks much, but WB is an intriguing long idea especially if we see bulls seize upon one of these broad market gaps higher anytime soon.