Not so long ago traders were anxious for the return of volatility. Some back-and-forth action rather than relentless one-way moves to the upside sounded like a refreshing change to nimble traders that were weary of a market that never offered entry points.
Traders got their wish but they may not be feeling so positive about it now. The swings are massive and random. We have train track patterns with two big reversals in two days after the breakdown on Friday. There was only a minor attempt at another V-shaped move today and it failed at the same time that the indices had ramped up the day before.
What is particularly challenging about this action is that there is a major rotation. The big cap FAANG and technology names are being sold into the abyss. Action Alerts PLUS holding Facebook (FB) and Tesla (TSLA) aren't even seeing signs of brave dip buyers right now. Small caps are also performing poorly but the DJIA, which is the most meaningless of all the indices, is holding up fairly well due to one of the worst stocks in the market, General Electric (GE) . Procter and Gamble (PG) is also helping but that is a clear indication that there is desire for a stock that is supposed to be 'safe'.
The current action suggests that further downside is in the cards but given the randomness of the action is is tough to make any prediction. The selling is picking up into the close and the failure of yesterday's bounce is not going to inspire confidence in those that have an inclination toward dip buying.
Have a good evening, I'll see you tomorrow.