Don't Let This Rally Lull You Into Complacency

Oil and commodity stocks are being pummeled today, and technology isn't so hot either, but the financials continue to catch a bid, and that is enough to keep things close to even.

Although it is nice to see the indices holding up despite poor earnings from Apple (AAPL - commentary - Cramer's Take), American Express (AXP - commentary - Cramer's Take), Merck (MRK - commentary - Cramer's Take) and Texas Instruments (TXN - commentary - Cramer's Take), it is not an easy environment at all.

A lot of folks are convinced that the move in financials is largely an SEC-induced short squeeze, and with the destruction of all the commodity-related groups including oil, there is awfully thin leadership out there. We really needed technology stocks to step up and that isn't happening after the reports from Google (GOOG - commentary - Cramer's Take), Apple and Texas Instruments.

I would not be surprised to see the market get stuck in a trading range here, as this choppy rotation continues to seesaw back and forth. I would not at all be surprised to see oil, coal, steel and solar all bounce big tomorrow after the hits they are taking today. That is what is making this market so tricky.

Medical and biotechnology have been leading, but we really need broader leadership. This move in financials is too far too fast for the group to easily continue to outperform to the same degree. Until we get some better leadership, the market is likely to stay contained. That can produce some good trading, but it will make it hard to carry a lot of open positions.

At the time of publication, DePorre had no positions in stocks mentioned.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.