Headlines about the increase in Covid-19 cases in Florida, Texas and Arizona are triggering some selling pressure today. Breadth is running around 5 to 1 negative and new 12 month highs are down to around 60.
The hot pockets of strong speculative action have narrowed quite a bit but traders are still looking for action and are moving a few things like Tortoise Acquisition (SHLL) , Workhorse (WKHS) , Axsome Therapeutics (AXSM) and Vaxart (VXRT) .
While speculative trading has slowed, I don't expect it to suddenly disappear. Traders are trying to navigate the end of the quarter games that are going to move around quite a few stocks for a variety of reasons that have nothing to do with their individual merits or lack thereof.
Quite a few bears believe that there will be some big reallocations by pension plans out of equities and into bonds. That is probably being anticipated to some degree today and is helping to cause the selling pressure.
The downside action isn't that big of a negative for short term speculative traders as it does help to create some new setups. If this correlated selling continues that will change the situation but currently, I don't see any real fear or worry about trade opportunities disappearing. The market pullbacks are more positive than negative.
I'll be looking for some buys into weakness but it is going to be a very messy market on Monday and Tuesday as we wrap up the quarter. I want to stay very flexible and will be ready to adjust quickly as conditions change.
Currently, the sellers are finding some downside momentum but betting on downside follow-through has not been easy.