There are two patterns in this market currently. The first is rotation between the Nasdaq 100 ETF (QQQ) and the DJIA and S&P 500. The second is alternating days of strength and weakness. One day there is rotation in one direction, the next day there is rotation in reverse.
Today it was QQQ's turn to lead. The other indices were close to flat, but breadth was quite good and that gave the action a positive feel.
The problem is there hasn't been good follow-through lately except for the QQQ to the downside. That has been the biggest negative, so there are some sighs of relief when the QQQ bounces back. Does it mean the worst is over? There is nothing to indicate that this period of chaotic rotation has ended. As I've noted, this sort of action is an indication of greater uncertainty and often precedes a change in market direction.
There are some pockets of positive action, like Alibaba (BABA) , old Stock of the Week Everspin (MRAM) , Calithera Biosciences (CALA) and Baozun (BZUN) , but it is limited. Traders are not aggressive with positions since they have been whipsawed quite a bit lately.
What we need is some sustained action in one direction. The more often we flip-flop each day, the greater the likelihood the resolution of the trading range is to the downside.
Have a good evening. I'll see you tomorrow.