There has been a market pattern over the past two weeks of strong opens and weak closes. Stocks are being sold into the early strength and then struggle the rest of the day.
This is pretty typical of how corrective action manifests itself. It sucks in optimistic bulls and then disappoints them. Over time this takes a toll and leads to the suppressed sentiment that eventually leads to a low.
We have another positive open Tuesday morning as inflation reports came in lower than expected, but so far, that strength is being sold, and the S&P 500 is already back into negative territory. Breadth is still positive, but there are only a dozen stocks on my scan that are up more than 10%.
I do not see any rush for the exits, but I do not see any rush to buy either. There are some good charts developing as a result of this corrective action, but there is no indication that they are ready to break to the upside any time soon.
One name that I'm adding today is Hut 8 Mining (HUT) . This is a cryptocurrency mining play and has been consolidating after a good run and forming a flag pattern. I've taken an initial position and will look to add to it later in the day on strength.
Another play I'm watching is DatChat (DATS) , which needs a move through $8 to bring in momentum players. Bellus Health (BLU) is a biotech with some good follow-through, and my Stock of the Week, Butterfly Network (BFLY) , is showing some strength.
There isn't a lot of strong momentum out there right now, and it is easy to get trapped, so move incrementally when entering a new position.