The weak bounce yesterday was a good setup for a panicky reaction to trade war news this morning. While Chinese retaliation wasn't a huge surprise it made for some dramatic headlines this morning. Many market players have been anxious for the 'Trump destroys the economy' trade and this news was tailor made for that meme.
As usual the Trump disaster proponents have overplayed their hand and the indices have bounced straight up following the open. Although the indices are still down quite a bit the dip buying has been quite orderly so far.
As long as the early lows are not breached watch for the buyers to continue to nibble away. Many stocks are already at support levels and are offering opportunities to start some positions.
This morning I mentioned biotechnology as a group that may be offering up some entry points as it has sold off even though it really has nothing to do with trade wars. Two stocks I'm looking at this morning as they drift lower are Sangamo Therapeutics (SGMO) and Aimmune Therapeutics (AIMT) . Both are approaching some key support levels and have been drifting lower on light volume. AIMT has a drug for peanut allergy that is showing great promise especially as competitive efforts have failed.
The dip this morning is a technical positive as far as helping the indices to find a support level. The bulls that rushed to buy yesterday needed to be washed out so they would learn to not take bounces for granted.
I like the way this market is developing from here and will continue to look to put cash to work.