It was a very choppy day of action with at least a dozen buy and sell programs pushing the indices around. The good news, though, is that the bears were unable to gain further traction to the downside.
Breadth was even and there were over 270 stocks hitting new 12-month lows. Still, the indices did not undercut Wednesday's lows and that provides some hope that a bottom could form.
Most notable Thursday was the strength in bonds. Interest rates continue to fall and that pushed the 20+ Year Treasury Bond Fund (TLT) to its highest level since November 2016. Bonds are viewed as a safe haven in a weak economy so this movement is creating the specter of an impending recession.
In addition to strength in bonds, precious metals traded strongly. This is another safe-haven asset and hints at the concerns that are bubbling up in the market. The Vice Chair of the Fed, Richard Clarida, added to the pessimism with comments that the central bank could act if needed.
The action Thursday did little to change the big picture. The indices are still struggling and are stuck in a downtrend and the narrative remains decidedly negative. There is a good chance of some sort of relief bounce soon but the key word here is "bounce." There is no good reason to believe that a low is forming at this point.
The best thing I can say about this market right now is that this action will eventually produce a fresh crop of opportunities.
For now we have to focus on protecting capital and avoiding further downtrends.
Have a good evening. I'll see you Friday.