Stocks gapped down Monday morning, as a sharp drop in oil hurt sentiment and technical traders were concerned that the V-shaped bounce that has been running for two weeks may finally hit some resistance.
Despite the weak start, dip buyers showed up and are holding the indices steady. Breadth is poor with around 1,800 gainers to 5,400 losers but I'm seeing signs of stock-picking that is helping sentiment. A good example is the biotechnology sector (iShares Nasdaq Biotechnology ETF (IBB) ). which is at all-time highs. That sector doesn't look anything like a bear market.
In addition, the "go-to" Covid-19 plays, which include Amazon (AMZN) , Netflix (NFLX) , Walmart (WMT) , Shopify (SHOP) , Roku (ROKU) , and others continue to attract traders that are looking for action.
It is the aggressive traders that are providing bids and preventing downside momentum from building. While they may not be bullish longer term that isn't going to stop them from looking for some short-term trades when they have an opportunity.
The indices are setting up an intraday trading range. This means that short-term traders will be looking for opportunities at the highs and lows of the day. Overall it is health action despite the red indices, although the likelihood is that there is going to be some news flow that will cause a jump in volatility.
I'm doing some small trades with short-time frames. Some of my recent picks such as Schrodinger (SDGR) , Chewy (CHWY) , Bilibili (BILI) , Slack (WORK) , Ocular Therapeutix (OCUL) and others continue to act well.