The big gap-down to start 2019 attracted some dip buyers but now the question is whether they will stick around. The biggest problem the market has faced recently is that momentum tends to fizzle out. The bulls have been saved when big allocation programs have occurred but without them strength has been producing exit points rather than chasing.
Despite the bounce off the lows, breadth is still quite poor with around 2,200 gainers to 4,800 decliners. There are only 11 new 12-month highs and 140 new 12-month lows.
The problem the market faces is that it is technically overbought after the bounce of the last few trading days but the first day of a new year always attracts market players trying to start off on the right foot. They want to start outperforming right away and that pushes them to make buys of some things they may not normally find appealing.
The biggest obstacle I see right now is that there simply are not very interesting long setups. There are some day trading opportunities, but it is primarily "junk" stocks that are attracting speculative interest. Names such as Qutoutiao (QTT) Marin Software (MRIN) , Bright Scholar Education Holdings (BEDU) , Intec Pharma (NTEC) and Adial Pharmaceuticals (ADIL) are on the radar as traders look for something to do.
I am dinking around with a few small trades as I await better opportunities to build some positions. I still like the biotechnology group for a bounce as tax-loss selling comes to an end and a number of conferences are approaching.