We have some classic 'buy the dip' action this morning as stocks dropped sharply at the open but immediately found support. Most everything is off the early lows but breadth is poor with around two losers for every five gainers. Once again it is big-cap technology and the FATMAAN names that are leading to the downside. The Nasdaq 100 ETF (QQQ) is down 1.86%, while the Russell 2000 (IWM) small-cap index is exhibiting some relative strength with a loss of 0.9%
The key technical issue at this point is that the early lows hold. The longer the lows hold then the greater the inclination to worry about missing out on more bounce action.
I can't stress enough that this is a market for stock pickers. The pundits and business media are focused on the indices and the big cap technology names but there continues to be great trading in individual stocks. This action is not correlated and it is refreshing to see that poor FATMAAN sentiment is not hurting other stocks.
I've been buying into weakness this morning. A few things I added were Trulieve Cannabis (TCNNF) , Landcadia Holdings II (LCA) , Personalis (PSNL) , Xeris Pharmaceuticals (XERS) , and several others.
I view this rotational action as quite healthy and it is likely a good setup as we head into third-quarter earnings in a few weeks. My game plan continues to be to focus on the price action in smaller stocks and to trade the best charts. I'm not going to be distracted by all the whining about the 'big picture'. The way to make money in this market is to trade the stocks that are working. The good news is that quite a few are working.
