Let's Take a Recess from the Recession Talk

Further strength in the broad market today, including the suddenly explosive-looking small caps in the IWM (ETF for the Russell 2000 Index) is surely putting bears on the run.

For a while now, the overhang of choppy price action in the face of geopolitical, economic, and monetary risks, not to mention global growth slowing, all served to give the bear case merit going forward for some type of cyclical downturn, if not worse. 

However, the notion of an "obvious," imminent recession almost always needs to be met with skepticism, since recessions tend to come when the majority doubt one is, actually, underway. Of course, another theory is that we already saw the slowdown and felt it with tedious price action the last few quarters. And now we are emerging for the next upturn in both stocks and the economy at-large. 

Either way, with biotechs, small caps, housing, heck, even energy and materials leading the party today for bulls it would behoove us to focus more on the market's message that sellers may be out of gas after squandering multiple opportunities to really take this tape down in recent months, to little avail. 

On that note, if the bull party continues it is hard not to look at names quickly shaking off earning hiccups in strong sectors, and for those names otherwise sporting sound charts. 

Trex is one such example, bouncing back nicely from its earnings dip earlier in the week. As part of the hot XHB ETF, TREX seems like a logical play on the new themes in the sector, such as new tech for outdoor decking. 

Overall, improved price action in much-needed parts of the market for bulls is bolstering this move to new highs on the senior indices. The main element I continue to demand going forward in order to increase my long exposure is broader-based participation from individual issues.