I've been yammering quite a bit about how the character of the market price action has been shifting lately. I don't see anything in the action so far this morning to change my mind. The Nasdaq 100 (QQQ) is unable to do much after the bounce yesterday. In the past, these sorts of bounces led to very strong follow-through, but buyers are no longer as energetic.
Breadth is positive and small-caps are showing some relative strength but, like yesterday, the number of new 12-month lows exceeds the number of new 12-month highs. This is a tipoff that pockets of momentum are limited.
What is going to be the key to navigating this market is watching for new intraday lows. As long as the lows aren't breached, there are likely to be buyers that are worried about missing out on bounce action. But as soon as there is a new intraday low, that will trigger sell stops and cause the momentum buyers to hit the exits.
I have not made any new buys so far, but will be watching to see how setups develops as the day proceeds. Many biotechnology stocks have pulled back and are bouncing. Also, with bitcoin going nuts, the related plays like Overstock (OSTK) , Square (SQ) , Riot Blockchain (RIOT) and Social Reality (SRAX) are active. I continue to trade the group with very short timeframes.
I am unconvinced that we have seen the lows, but that doesn't mean we can't bounce and squeeze some bears.