The market was struggling to bounce on a more dovish Powell but news that President Trump would be imposing tariffs on steel and aluminum caused a fresh wave of selling to take out the 2700 level of the S&P 500.
Typically when a much watched level like this is breached there will be a quick stop run and a bounce as traders try to anticipate the reaction. The S&P 500 is now slightly back over the 2700 level as a I write but whether that was a sufficient 'washout' remains to be seen.
There is no question that this price action is negative but the big issue is whether we see a decent relief bounce before there is another stab to the downside. It may not be that easy to cut through the 2700 support at this point but another test of that level has much higher odds of failing.
I'm focused on managing positions and am doing very little new buying at this point. I do add some US Steel (X) on the tariff announcement. Some of the small biotechnology names I favor such as Sorrento (SRNE) and HTG Molecular (HTGM) are down. I'm a buyer of both but on a very slow and wide scale.
The risk of another whoosh down is quite high and that will give us a good snap back opportunity. It feels as if too many buyers are thinking there is support for a bounce now. I'm not getting that feeling from this action.