Shark Bites: Pullback Isn't Over

 | May 18, 2017 | 2:00 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






The market drop yesterday had traders excited about the possibility of increased volatility. The pattern lately has been a lack of further action. After a sizable move, the market has quickly gone flat again.

This morning we did have a bounce, but given the size of the drop yesterday it isn't very energetic. The indices are up about 0.25% after a drop of 1.77% in the S&P 500 and 2.7% in the Russell 2000 ETF (IWM) .

The good news is that the indices are staying above the intraday lows, but breadth is slightly negative and there doesn't seem to be too much concern that we are going to go straight back up. The longer the indices can hold steady, the greater the likelihood that buyers will inch back in, but so far this is not very convincing.

Downtrends are made up of failed bounces. It is when bounces fail a few times in a row that negative sentiment starts to build. Instead of sticking with longs because of confidence that there will be a bounce, there is a greater tendency to sell into strength to avoid being caught in another rollover.

I'm using the action today to do some repositioning. I sold a few things that bounced like Applied Optoelectronics (AAOI) and will likely jump back in some index shorts if there isn't better action in the final hour of trading or if the intraday lows are retested.

I don't see any reason to be confident that this pullback is completed. This is weak bounce action and illustrates that market players are not overly optimistic about shaking off the recent negatives.

I sold a partial position in GlycoMimetics (GLYC) , which I mentioned as the star of the day, but may have to buy it back if the stock continues to hold up.

Columnist Conversations

What ISN'T this company doing? Continues to dominate -- nice set of deals unveiled overnight.
The futures are up slightly this morning as traders buy yesterday's junk. As noted in last night's Strategy Se...
Equifax's (EFX) CEO is being replaced today in response to the data breach incident. Trading in the shares ...
TheStreet's Scott Gamm has Jordan Belfort on-camera today. Any questions you may have for the Wolf of Wall Str...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.