The selling that began on Wednesday expanded Thursday, but the bears still were unable to close the deal. Big cap technology and FATMAAN names come under pressure again and breadth moved to around two to one negative, but support held and there continued to be some rotational action that offset the pressure on technology names.
The big worry lately has been whether the negative sentiment created by continued pressure on Apple (AAPL) , Facebook (FB) , Amazon (AMZN) , and their cohorts would spill over and hurt the rest of the market. There were some signs of that today, but the dip buyers showed up at the open and they didn't panic when the opening lows were tested several times during the day. In the final hour of trading, the bears appeared to give it up and the S&P 500 hit the highs of the afternoon at the close.
My main thesis lately has been that this is a market for stock picking rather than market timing and that proved to be the case once again. Small caps in the Russell 2000 fund (IWM) showed good relative strength and breadth wasn't that bad with around 2,700 gainers to 4,500 decliners. There were even 80 new 12-month highs and the number of stocks at new 12-month lows at 25 is not reflective of a bear market.
What some of the bears are missing about this market is that market players are not dumping the FATMAAN names and running for safety. They are looking to put those funds back to work in other places. This isn't similar to other major breakdowns where stocks are sold indiscriminately, and bids disappear. The merit of individual stocks matters and "good" stocks are being bought.
If we take a couple of steps back and look at the S&P 500 and Nasdaq ,they are in very poor shape and look quite precarious. I wouldn't buy either of them at this point, but then when I start digging through various charts I'm still finding things I want to own. The indexes look very dangerous, but many stocks just don't reflect that fact. If you're trading indexes, it's tough to be bullish, but if you are trading stocks, then bullish is the way to go.
Have a great evening. I'll see you tomorrow.