The S&P 500 is trading down just four points, but that greatly understates how poor the action is this morning. Despite some good earnings reports from Tesla (TSLA) , Twitter (TWTR) , Celgene (CELG) , F5 Networks (FFIV) and several others, the opening gap was hit hard. Market players wanted out and they used the strength at the open to escape.
There are a couple of other worrisome developments. The iShares Russell 2000 (IWM) (a Stocks Under $10 holding) is building on yesterday's technical breach -- and the biggest IPO of the year, ZTO Express (ZTO), failed to open above its pricing of $19.50.
The price action in a number of this summer's hottest stocks is downright pitiful. Acacia Communications (ACIA) , TPI Composites (TPIC) , Twilio (TWLO) , etc, are all in freefall with little support. The momentum, which worked so well on the upside, is equally strong to the downside.
As I've discussed, I've been in a high level of cash for a while now, primarily as a function of my inability to find good setups. The indices haven't looked bad, but the action in individual stocks has been poor. As far as I'm concerned, it is all about stock picking -- and is not favorable at this time.
The good news is that it feels like the level of negativity is finally building, which is what we need to move this market to a tradable low. We aren't there yet, but the level of disgust is building -- and that is what we need.
All I'm doing at this point is playing defense. I see nothing much I want to buy right now, but may consider some Facebook (FB) (an Action Alerts PLUS holding) in anticipation of its earnings next week.