Yesterday's huge bounce is not producing any sustained follow through this morning. The selling is very broad with breadth running about 1850 gainers to 4750 decliners.
As I discussed in my opening post, the key to the market now is individual stock picking. It is important that the bulls focus on accumulating individual stocks that they perceive as values and start to ignore the macro and structure issues that produced this corrective action. So far that is not happening. There are no safe havens so far. In fact there are only about 20 or so stocks that are up 5% or more on my screens which is very low.
Another negative is that Netflix (NFLX) is not being chased higher. It is well off Tuesday night's highs. On Tuesday, the ability of Adobe (ADBE) to run higher after its earnings news was one of the key things helping to impact sentiment. On Wednesday the stock is down on profit taking.
One sector that is seeing a little strength is semiconductor equipment. Lam Research (LRCX) posted upbeat news and is helping to lift Applied Materials (AMAT) , Ichor Holdings (ICHR) and several others in the group. All of these names have been in a strong downtrend for a while and the bounces are not holding that well. There is major concern that the chip cycle is turning down and that more correction is needed. AMAT is providing a way for some nervous bulls to escape and is likely to retest its lows again very soon.
Pot stocks are seeing a classic 'sell the news' reaction on the first day of legal cannabis sales in Canada. They will need time to set up again. Nothing to do there for now.
The indices need to find support and we need some better pockets of strength before we can have more confidence in this market. I'm looking around with some low priced junk names like vTv Therapeutics (VTVT) and SELLAS Life Sciences (SLS) . One bigger cap names that I'm interested in accumulating in here is Amarin (AMRN) but otherwise I'm doing very little.