The huge gap-down open created some panic and made the usual dip buyers cautious. There was some buying of the weakness, but there is a hesitance to chase. The primary technical question now is whether the opening lows hold as the day progresses.
Breadth is nearly 10 to 1 negative, and there are only five names hitting new 12-month highs. However, there are less than 200 new 12-month lows which tell us that quite a few stocks are still quite extended. Needless to say, there are only five stocks up more than 10% in the early going.
I've been discussing for months that this is a two-tiered market with the indices and big-caps covering up very broad weakness under the surface. Therein lies the great opportunity in the current market. The many names that have already dropped into bear market territory don't have that much downside risk compared to some of the big-caps that are still very overbought technically. I am looking for relative strength in secondary stocks right now.
I've done a little buying this morning in a few favorites like AMMO (POWW) , Performant Financial (PFMT) , and Butterfly Network (BFLY) , but still have plenty of room to add. DatChat (DATS) is another one that is acting well, and I'm inclined to accumulate.
Two de-SPAC plays I'm looking at are TMC (TMC) and Clarus Therapeutics (CRXT) . CRXT is of particular interest. It has a small float and received a buy recommendation from Cantor Fitzgerald this morning with a price target of $20. The company is conducting a presentation this afternoon at the Oppenheimer Fall HealthCare Summit.
I don't believe the indices are going to hold above this morning's lows, but I like the opportunities I see in the secondary stocks that started correcting back in February. With the indices finally joining the party to the downside, we have the potential for some bottoming action.