Bonds have bounced off the lows and the equity indices have recouped early losses but the bounce action is slow in gaining much momentum. Breadth is right around even but that list of new 12-month lows is still around 350. New lows have been contracting but are still sizable.
One issue that many market players miss about the level of new lows is that they demonstrate that the market has already undergone a substantial correction in many areas. Unlike the S&P 500 and DJIA, many stocks have been dropping for a long time and have wiped out all their recent gains.
That is a problem if you are holding some of those stocks but it is a good metric to watch if you are looking for some bottoming action. In a major downtrend we would see new lows expand even more but this has already been a good washout in many places.
Another interesting issue this morning is that I'm seeing a decline in the number of stocks that are up over 5% or more. This is a measure of speculative interest and reflects recent frustration by aggressive traders. The big movers just aren't moving as well. There are always a few like Pyxus (PYX) and 22nd Century Group (XXII) , but it is very limited.
There does seem to be some increased willingness to bottom fish broken stocks. For example Twitter (TWTR) , which is one of Doug Kass' favorites, is finally managing a higher high. For a technical trader like me this is the sort of action I'd want to see to start a position in a bottom fishing play and I have taken a little. I'll add as it develops further but this is no longer in a free fall and that is the first step to some upside.
Another stock that is seeing a little bounce this morning is Alphabet (GOOGL) . It has been under pressure with the rest of the FAANG names but bounced off its 200-day simple moving average yesterday and is seeing some green today. Unlike Twitter, the underlying support there is not nearly as strong and I would not trust that this is a good low.
GOOGL's valuation isn't bad but it moves with big cap technology names that have been suffering from rotation lately. It has some support but it needs better market action to help it establish a stronger base. Optimism into earnings in a couple of weeks could help it recover some from here, but the 20-day moving average and the $1200 level will be resistance.