The gap-down open produced some brief dip-buying, but it didn't last for long. The S&P 500 rolled over again and made a new intraday low. We have not had significant lower lows following a big gap down open since last Sept. 9.
The bears' problem for the last eight months has been their inability to produce downside momentum. They have a day or two of success, but the market bounces right back up quite quickly. A big part of this is due to computer algorithms that have made a mint buying weakness. That program buying helps to prevent negative sentiment from building. Everyone knows that we will come back from this sort of action quite fast.
In the early going breadth is running very poor, with just 1,275 gainers to 5,120 decliners. That is particularly notable in that we have 100 new 12-month lows but only 80 new highs. It has been a while since that has occurred.
The market's inclination has been to shrug off these selloffs, especially when they are politically driven. The argument is that the market is concerned about delays in Trump fiscal policy but that idea hasn't gained traction so far.
I'm holding some index shorts in the form of Direxion Daily Small Cap Bear 3X Shares (TZA) and ProShares UltraPro Short S&P 500 (SPXU) that I will keep in place for now, but there are some individual stocks I'd like to add on weakness. I'm not going to do anything right now other than identify the stocks I'll average into on some pullbacks.
Cocktails & Cramer
Join Jim Cramer on May 23 for an exclusive party at Bar San Miguel, his Brooklyn tavern. You'll get to watch a screening of Mad Money, after which Jim will arrive fresh off of the CNBC set to mingle, pose for photos and answer your investing questions. Participants will enjoy dinner, drinks, an autographed copy of Jim's book Get Rich Carefully and a one-year membership to Action Alerts PLUS, Jim's club for investors. (Current AAP members will receive one extra year of membership for free.)
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