Extremely chaotic market action continues this morning, but it is primarily a reversal of what occurred during the half-day session on Monday. The Nasdaq 100 ETF (QQQ) big-cap names are leading while small-caps, financials and the S&P 500 lag. Breadth is still positive, but there are very few, if any, pockets of momentum.
Most notable this morning is weakness in Tesla Inc. (TSLA) , while a few names such as Nvidia Corp. (NVDA) and Facebook Inc. (FB) try hard to bounce. If QQQ goes red again today, it is going to cause some additional worry. It already is oversold and the inability to bounce is a change that many market players will find disturbing.
My thesis recently has been that this chaotic action is signally a change in market direction. I'm holding index shorts in the form of Direxion Daily Small Cap Bear 3X Shares (TZA) and ProShares UltraPro Short S&P 500 (SPXU) . I'm also short biotechnology in the form of Direxion Daily S&P Biotech Bear 3X Shares (LABD) .
There are still some individual stocks of interest, but for the most part I think better entry points will develop so I'm not doing any major buying right now. One example on my radar is recent initial public offering, ShiftPixy (PIXY) , which is pulling back today on lighter volume.
Maybe the dip buyers will make another try, but right now this price action is poor. It looks reasonable to believe this correction can gain some traction.
