While Monday's market action is positive, it is difficult to believe that it is particularly meaningful. It is the last day of the third quarter, which means there is likely to be some portfolio shuffling. This has been a very busy month for rotational action out of high-beta momentum names and there is probably some clean-up moves to be made.
The most notable action in individual stocks are the bounces in the stocks that have been hit hardest in recent weeks. Names such as Twilio (TWLO) , Roku (ROKU) , CrowdStrike (CRWD) and Slack Technologies (WORK) are leading the action.
Unfortunately, the technical pattern presented by these stocks is not very convincing at this point. These are oversold bounces in badly broken charts. It is possible that a low was formed but it is hard to have much confidence in it until there are retests or some indication that a support level has been formed.
Typically the shorts will be looking at re-entry into oversold bounces of this sort, especially since many of the buyers are short-term flippers rather than longer-term investors.
The longer this strength holds the more likely it will attract some sidelined cash but the headline risk is high and technical conditions poor. Small-caps are lagging, which indicates that there is little speculative interest.
I'd really prefer to be more upbeat but it is going to take more than an oversold bounce on the last day of the quarter to change the character of this market. I'll be looking to put some more names on the radar but initial positions will be small.