The market is suffering some significant corrective action Thursday. A bounce try failed and the S&P 500 is now hitting an intraday low with a drop of 3.7%. Most of the selling is in big-cap momentum names and is better reflected in the Nasdaq 100 (QQQ) , which is down 5.25% and the IBD 50 Fund (FFTY) , which is taking a hit of 6.4%.
It is very broad and deep selling, but it would likely be much broader if there had not been so much weak breadth lately. Many stocks have been correcting for a while now and they are closer to finding some support than the very froth FATMAAN and momentum names. This has been a narrow market, driven by some big-cap technology names and now the most severe corrective action is in those same names. What goes up, must come down.
As I consider this action, what I'm looking for are those stocks that are holding up better than the indices especially those stocks that are at support. These are the names that should be the lowest risk trades as the selling slows and some bounce action begins. If they can't push them lower on a day like this, then they aren't likely to get them down much more.
A few examples on my screens are Dada Nexus (DADA) , Synchronoss Technologies (SNCR) , Xeris Pharmaceuticals (XERS) , Vuzix (VUZI) , and Kensington Capital (KCAC) . All those are holding well and I'm inclined to add to those positions as the market action develops.
The action in the indexes is going to scare some people today, and it is prudent to honor stops and stop the bleeding if you are taking some hits. However, the selling I'm seeing in some of the secondary names is not nearly as bad as this sort of correlated selling usually produces. The poor breadth lately is a positive for many stocks and is helping to move things toward support levels at a much faster pace.