A late bounce took the indices off their lows but it was a very poor day of action for the indices with breadth around 5 to 1 negative at its worst. There was also over 230 stocks hitting new 12-month lows versus just 90 at their highs.
The worst thing about the action today was that there wasn't any quick bounce try in the early going. Some late buying helped matters but it didn't do much to change the technical picture and the technical pattern is a major problem.
The S&P 500 found support at the 2700 level and the Nasdaq bounced off the 50-day simple moving average almost exactly to the penny at 7284. While those technical levels did hold, they look precarious at best and it wouldn't be surprising to see another attack on that support.
The blame for the action is being laid on Facebook (FB) which suffered a storm of outrage over its breach of privacy. That would seem to be a company-specific event that might impact a few other big players in social media, but it was used as a justification to sell everything. There is no reason that a biotechnology or industrial should sell off on Facebook news but they did.
What this action tells us is that the market needed some resets and to test some support levels. There isn't any big change in fundamentals but every once in a while the market needs to clean out some of the excess and show the bulls that they can't take the upside for granted.
Technically this market looks like it can lower from here but I don't think the dip buyers are dead yet. I'll be looking for a setup that will trigger their buy programs fairly soon.
Despite the carnage there were some small caps working like HTG Molecular (HTGM) . A few picks like that make up for a lot of sins.
Have a good evening. I'll see you tomorrow.
