Breadth is running slightly negative in the early going Wednesday, but we have some bounce action developing after the broad selling on Tuesday. It is tentative, but there is more positive action in the broken small-caps than there has been in a while.
The question we have to consider when there is an oversold bounce in broken stocks is whether it will be used as a means of escape for stuck longs that are anxious to reduce recent losses, or will it stir up some "fear of missing out" if it holds up for a while?
It is premature to draw any conclusions at this point, but these sorts of bounces help to build some support levels that can provide better chart setups as they develop. What will really make a difference is if that the strength holds, and we have a strong close, but it is too early to worry about that.
I'm doing some minor buying but am keeping most of my buying power in reserve for now. My Shark Technical buy today is CVS Health (CVS) . The stock has been testing multiple tops just under $77 and is making the breakout move Wednesday morning.
I also have a small position in Upstart Holdings (UPST) which broke its 50-day simple moving average Tuesday but has not regained it. This was a momentum favorite and is going to attract interest if it can show some relative strength again.
The action is a little better out there, but there are quite a few market players that would like to escape some poor positions, so it may be tough for momentum to build right now. We'll see what develops.