The bears are enjoying their best day since June 27 and now the big question is whether this will develop into trending action. The S&P 500 is still holding some key support levels but it is under the 200-day simple moving average at this point. Breadth is better than 5-to-1 negative and we only have 58 new highs to 32 new lows.
So far there have been no bounce tries, which is a change in character, but counting on sustained downside moves has been nearly impossible. The bears have not strung together two sizable downside days since the post-Brexit reaction in late June.
Is the party over? Maybe. What we need to do is take steps to protect capital. If you are long, it is nearly impossible taking some hits. That is the price you pay for sticking with momentum and being reactive rather than anticipatory.
Sometimes when we are suddenly taking some hits, we can lose sight of the fact that there are quite a few opportunities developing. We need to play defense but we also need to be aware that there are opportunities developing. If you have been waiting for entry points, we are seeing some now.
On days like this, I want to make sure I have a shopping list ready. Stocks are being sold without regard to their individual worth, so the possibility of some good opportunities is increasing.
Some of the names on my shopping list include: Facebook (FB) , TPI Composites (TPIC) , Airgain (AIRG) , Shopify (SHOP) , Aratana Therapeutics (PETX) , Fabrinet (FN) , Lantheus Holdings (LNTH) , Acacia Communications (ACIA) and Global Blood Therapeutics (GBT) .
I'll have plenty more as this pullback develops, but that is what I'm looking at right now.