We have some classic bottoming action taking place this morning in the groups that have been hit the hardest recently, such as small-caps (SMH) and biotechnology (IBB) . It is still quite early, but negative sentiment in these groups has become extreme and the gap-down open this morning was what was needed to wash out a few more weak holders.
The key now is that the early lows not be breached. The longer we can stay above those levels, the better the support.
I haven't done any major buying yet, but I have added to a few things like TaskUs (TASK) , Forte Biosciences (FBRX) and AMMO (POWW) , but this market still has quite a bit of work to do in order to prove itself.
Breadth is still quite poor at around 2-to-1 negative, but the good news is that the Russell 2000 ETF (IWM) is outperforming the Nasdaq 100 (QQQ) . We need the gulf between these groups to close, and there are signs that is occurring.
There are about 60 new 12-month highs and 135 new 12-month lows. We need those lows to accelerate a bit more, but the declining number of new highs is positive.
Don't be too optimistic too soon. There is some substantial technical damage, and support levels have not yet formed, but early indications are looking ok, and that is a start.