We have textbook "buy the dip" action after an aggressive gap-down open. There was a little downside follow-through in the early going, but the dip-buyers went to work about 15 minutes after the open.
Small caps are producing the best bounce so far, while the S&P500 and Nasdaq are lagging a little. There is still plenty of red on the screens, but the bulk of the market is well off early lows. Breadth was hitting around 3 to 1 negative, but is now slightly better. New 12-month lows are nearly twice new 12-month highs.
One of the big reasons that the bulls never worry very much is that these bounces always hold. There is no retest of the lows. If the S&P500 was to take out the early lows at around 2557, it would be a major change in market character and suggest that downside momentum was possible, but that is not happening.
Biotechnology has been badly punished lately, and that is the area I'm watching closely for buys on weakness. I also have a number of names on my shopping list, like Twitter (TWTR) , Ichor (ICHR) , Qudian (QD) , Phoenix New Media (FENG) , Alibaba (BABA) , Tailgrass Energy (TEP) and Trio-Tech (TRT) .
This market never stays down long enough for any real bargains to develop, so you have to have a fast trigger finger to benefit. One of those days, the dip-buyers are going to be trapped, but today doesn't appear to be that day.