The most notable characteristic of the market action today is that breadth is 2 to 1 positive even though the stocks that have been the primarily leaders for months are performing poorly. Apple (AAPL) has found its footing and reversed back up, but Tesla (TSLA) , Amazon (AMZN) , Microsoft (MSFT) , and the Nasdaq 100 ETF (QQQ) are solidly negative.
Some of the bears will tell us that the weakness in the big cap technology names is a warning sign. It is just a matter of time before the selling spreads to the broader market and takes us down. Typically, 'value' names like banks and industrials do not lead the market for long. They are outperforming today and that is creating some hope that the rotation out of 'growth' and into 'value' will continue.
Perhaps it will but to navigate this market effectively depends on managing individual positions more than anything else. The market timers are having a tough time due to the rotational nature of the corrective action that is taking place. Stock pickers that are staying focused on sectors and individual stocks are the ones that are benefiting.
What will concern me is if we start seeing more correlated selling. When breadth is closer to 3 to 1 negative that will be a sign to tighten up and not let positions slip much more.
It is important to note that I'm not trying to predict what will happen. Most all the big-time prognosticators have gotten this market consistently wrong. The only effective way to deal with it is to react as conditions change rather than to try to anticipate them.
I've reduced my overall market exposure some in the past week but I still see too many good trading opportunities in individual stocks. I'll keep buying them as long as they keep working.
Don't be scared by the word "bubble". Keep pursuing opportunities while you can.