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Intraday Reversals Signal Struggles for Market

But James "Rev Shark" Deporre says the trading action is both normal, and appropriate for September, and he's been adding some names to his portfolio.

September is beginning to live up to its reputation as a tough month for market bulls. 

“One of the primary signs that the market is struggling is intraday reversals. Indices hit a high early in the day, and then aggressive selling kicks in and stocks close weak,” James "Rev Shark" Deporre wrote recently on Real Money. That kind of action has been common in recent sessions.

But Deporre noted that  it’s nothing unusual. “We have needed some corrective action, and what better time for it to occur than in the weakest month of the year?”, he said.

One shift Deporre noted recently is that some of the supporting bids have disappeared. “This causes some sharp dips in thinner stocks, but very few signs of panic exist,” he stated. 

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Deporre believes that pockets of speculative trading are narrower, but the appetite for action has not disappeared. “One of the main reasons I don't think that this corrective action will go that deep is because of retail interest,” he said. “There is a good supply of traders that are going to go to work when they see better price action.”

Several names Rev Shark has added to his portfolio recently are ProQR Therapeutics  (PRQR) - Get ProQR Therapeutics N.V. Report which recently announced a deal with Lilly  (LLY) - Get Eli Lilly and Company (LLY) Report, and Butterfly Network  (BFLY) , which has been trading well following a strong earnings report on August 23.

One position he’s also building is somewhat of a sleeper - Performant Financial  (PFMT) - Get Performant Financial Corporation Report.

This company audits medical billing for Medicare and insurance companies, Deporre said. “This is a big business and not well understood. PFMT has transitioned from debt collection to auditing of medical billing, and the story is not yet known by the broad market. The stock is languishing now, and I'm slowly building my position as we await some news on contract wins.

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