Many traders have been complaining about volatility for years but now that it has returned it is making many of them nervous. The indices failed to hold the big gap-up open and small caps in particularly are seeing some intense flipping into the early strength.
Breadth is still very robust with better than 2 to 1 green but it is likely that unwinding of more of the complex computer traders are impacting the indices more than they are impacting individual stocks. This is likely to continue for a while and it is probably a mistake to try to read too much into it. The indices are just dancing around to some structural issues rather than technical levels.
The big question right now is to what degree should you be looking to take positions in individual stocks you may like. If the indices come under intense pressure again the majority of stocks are going to sink with them but, on the other hand, there are many stocks that have found support and are trying to shake off the pressure of the past week. I see quite a few stocks I like that are trying to stabilize but the nervousness of the market is keeping them volatility.
The character of the market has shifted. That is neither good nor bad. There is nothing to indicate that this downtrend is going to accelerate or to suggest that the worst is over. I am trying to navigate by buying individual stocks that I like which are coming off support. They have to be managed tightly but the good ones do offer good opportunity.
One of my recent favorites, HTG Molecular Diagnostics (HTGM) is popping up nicely this morning on a filing by Fidelity showing a position of 13.22% in the stock. Another biotech on my radar is Cara Therapeutics (CARA) which had an upgrade to buy and a price target of $27 from Janney, this morning.
The indices are drifting lower as I write but I suspect we are going to see another snap-back develop pretty quickly. Volatility is back. Govern yourself accordingly.
