The first trading day of 2020 is presenting challenging action for market players. Many were looking for some profit taking to kick in quickly but the news of the large liquidity injection by the People's Bank of China caused a large gap up open. Much of that money seems to have flowed into Apple (AAPL) which is extending to new all-time highs and is extremely overbought at this point.
Under the surface, there is quite a bit of reversal action and the S&P 500 ( (SPY) ) just took out the opening lows which is triggering some aggressive selling. There is still a large gap on the intraday chart but breadth is dropping very quickly and many secondary stocks are selling pressure now. Apple is now totally offsetting negative breadth in the Nasdaq.
This action is largely a function of an extended market and positioning because of the new year. There is no news flow to blame. Stocks need a rest but there is still plenty of liquidity out there. On the other hand, many market players have been waiting to take taxable profits and they will be more energetic in that regard.
I'm keeping a very close watch on Apple. When that goes red I expect to see that trigger broad algorithmic selling.
Some downside now would be a good setup going into earnings season so I'm being patient with new buys. There are still plenty of interesting stocks on my radar but there aren't a lot of good entry points.