The market is finally seeing some aggressive corrective action, but the last two times the indexes had any significant dip, they reversed back up the next day. The underlying support has proven to be too strong for the bears to gain traction, but every time there is some selling, it churns up talk about how another significant down leg is sure to occur sooner or later.
The indexes hit a low around 11:45 a.m. ET and are now drifting back up. What we will be watching for is whether the intraday lows around 3032 on the S&P 500 hold. If that level fails into the close, then the chances of some sell stops triggering are quite high.
The increased number of cases of Covid-19, plus plans by New York and New Jersey to quarantine visitors from states like Florida and Texas, is giving the sellers a convenient excuse, but the market still doesn't seem to be having much reaction to Covid-19 news. It just isn't causing the sort of panic that it caused back earlier in the year. The abruptness of the shift in February surprised many market players and we have to watch for that to happen again.
I'm seeing some bottom-fishing opportunities quickly develop in some of the special purpose acquisition companies like Forum Merger (FMCI) and Tortoise Acquisition (SHLL) , but I'm moving incrementally. I'll have plenty of buying power if there is further weakness.
The key right now is to see if the sellers can gain traction or whether this is just another "one and done" correction. The bears tend to become excited too easily when the market is hit like this, but there certainly are some good arguments to support further downside.