For a very long time now, the hallmark of this market has been the amazingly consistent dip buying. It is so aggressive, that premarket weakness is bought so fast that we end up opening flat.
On Thursday morning, the futures were as weak as they have been in a while, and we actually had a pretty good-sized gap-down open. That is rare. However, the dip buyers were simply a bit slow this morning. They hesitated, but just can't resist jumping in before any real momentum builds. The indices are well off their lows now, and the pattern is that there continue to be strong bids.
The FAANG names are the primary laggards on Thursday, as the Russell 2000 ETF (IWM) is outperforming. Breadth is running about 22-33 negative, but what is more interesting is that we have 64 new lows on the Nasdaq and only 47 new highs. That is blaring announcement that momentum is very narrow and has reversed in spots.
The list of new 12-month highs is still offering opportunity. We have some big movers, including Sage Therapeutics (SAGE) , Overstock (OSTK) , Roku (ROKU) , SolarEdge (SEDG) , Smart Sand (SND) , etc. I also continue to like the action I see in Twitter (TWTR) and continue to look for entry into Alibaba (BABA) in front of its Singles Day promotion this weekend.
If the indices fail to hold the early lows, it will be a change in character that will demand a reaction. So far, the underlying support looks strong. If for some reason the dip buyers start to weaken, then we better be ready to make some adjustments quickly.