For the second day in a row we have an intraday reversal to the downside and then some dip-buying action. On Wednesday the dip-buying gained steam all afternoon and ended up squeezing some overanxious shorts. The bounce action is not looking as robust Thursday and it is likely that market timers will press to the downside if there is some final-hour weakness.
I covered part of my shorts into weakness for a quick trade, but will be looking for remounts particularly if the lows of the day do not hold.
One of the great difficulties with the downside trades lately is that selling pressure is not lasting very long. The S&P 500 has been down more than one day in a row just one time since May 13. Trying to catch some sustained downside has been very difficult and the thinking that "we are due" isn't very effective.
I'm focusing on some stock picking, but it is becoming much narrower. I have a position in OneConnect Financial Technology (OCFT) , a China-based financial firm that used the cloud to provide support for banks, lenders, and various other financial firms. It is breaking out and is benefiting from the intense speculation taking place in Chinese markets.
It actually is good to see some selling today as it helps to create some new technical setups. I don't believe that we are seeing a major top at this point, which means that the pullbacks are tradable and much easier to trade than the chases.
We will see how we close today. The buyers don't look like they want to relent, but they will find themselves trapped sooner or later.