Unbelievable. I come back to it a few hours later and it's working. And then not 5 minutes after that it stops working while I'm trying other tools; Scale, Move, Copy,.. doesn't matter. Even selecting with cursor was working while Stretch was not and now that doesn't work either. Bizarre. Nothing has changed (system variables,..). The file has been open the whole time. 

PICKADD = 2. No difference with 1 or 0. Also tried changing OSOPTIONS, SELECTCYCLE?,...

 So I think at least we can rule out system variables or something I forgot to check or uncheck. Again, this was working fine on old iMac with same OS X. Everything was the same except for the iMac's.

Graphics card?

iMac (Retina 5K, 27-inch, Late 2015)

3.2 GHz Intel Core i5

24 GB 1867 MHz DDR3

AMD Radeon R9 M380 2048 MB

OS X 10.11.1 (15B42)