The "buy the dip" trade may have been painfully obvious but it is working again. There was some hesitation along the way and the indices haven't recovered completely but they are well off the overnight lows and are sucking in buyers who don't want to miss out.
Breadth is still negative with about 2,900 gainers to 3,500 losers but pockets of strength in some groups like software and biotechnology are producing about 150 stocks at new 12-month highs. That is pretty impressive given how far the S&P 500 still is from the January highs and the selling pressure this morning.
I've been picking at a few more favorites this morning. HTG Molecular Diagnostics (HTGM) continues to be a star. Immersion Corp. (IMMR) has contract news and is likely to continue to have good news flow in the future. Medical Transcription Billing (MTBC) is an interesting low-priced roll-up play in the medical transcription and billing sector that put up a decent report this morning. I think that has some potential to develop as it looks for some takeover candidates.
My Stock of the Week, Twitter (TWTR) , has regained its footing after a brief pause and I'll be looking to add to that on a solid close.
While I'm looking to buy a few things, I am not convinced we are going to see V-shaped strength from here. We have grown used to these straight-line recoveries and no longer seem to appreciate normal volatility. It makes for some great trading when we don't go in one direction most of the time, but it requires a shift in thinking.
I suspect that this bounce is going to slow down quickly and we may actually see some weakness this afternoon. While that may be heresy given the way so many traders honor bounces, this market is undergoing changes in character and it is likely to continue.
