Following strong rotational action on Tuesday, the market had a choppy session on Wednesday. Breadth was negative with about 3,600 gainers to 4,600 losers, but there was continued momentum in biotechnology and some health-related names. But growth stocks were unable to generate continued momentum after a big jump. ARK Innovation ETF (ARKK) , which was up 9% Tuesday, gave back 2.25% Wednesday.
The biggest positive is that new lows were relatively limited at around 440, which is an indication that there is bottom fishing taking place. It is notable that biotechnology has had the best relative strength of all sectors lately, as it was a leader to the downside as the bear market developed. There is improvement in the charts in the group, although they will need more time to prove themselves.
Bulls will be encouraged by some slightly better price action, but this is still a market that is clearly in a downtrend and will need more time and effort before the technical action improves. All of the indexes are still below their 50- and 200-day simple moving averages. It is possible that they have hit lows, but there is nothing to indicate that good momentum will develop at this point.
This continues to be a market for short-term trading, rather than the building of longer-term positions. We will have to stay patient as the market digests and discounts the quickly changing macroeconomic environment.
Have a good evening. I'll see you tomorrow.