Tuesday the gap-up open was aggressively sold and the equity indices completely gave up their gains. Wednesday the selling after the gap-up open was not as aggressive and the indices found support. The buyers jumped in and that helped to push the S&P 500 over its opening lows.
This is the sort of price action we need to restore some Fear of Missing Out (FOMO). We need some higher highs to hold before market players will start to feel that they can't just wait for another dip. The longer the indices stay in positive territory, the more confidence there will be that the worst is over.
The sellers are still out there, and the new day high is being sold so far, but the important thing is that the lows of the day hold for a change. If they are breached and we give back more of the early gains it is going to have a very negative impact on confidence and sentiment.
Even if you are optimistic that the market is finding a good support level it is still extremely hard to put much cash to work as there aren't many good charts at this point. It takes more than one day of positive action for a positive chart to form.
In a market environment like we have now you have to look for counter-trend bounces from oversold conditions as there simply will not be many breakouts from bases. A good example of stock that is working well technically right now is Twitter (TWTR) , but there are not many.
One of my favorite technical plays is New Age Beverages Corp. (NBEV) , which was my top technical pick before the open on Tuesday as it moves through its 50-day simple moving average.
NBEV is benefiting from the Farm Bill (read Debra Borchardt's take here), which is being voted on today in the House. The company issued a formal response to the Farm Bill and calls itself a "leading authority in the CBD-infused beverage space." That may be hyperbole but the company is starting production this month for some CBD products.
I'll be looking hard to put more money to work but it is a challenge to find good charts and it is difficult to have much confidence in a market where strength has been consistently sold. The market action Wednesday is productive and that is a good sign.