Sizable intraday reversals like the market had on Monday are generally viewed as bullish and often lead to follow through, but that wasn't the case today. The action now looks like a bull trap that has tripped up buyers that thought it was a sign that the worst was over.
Sell programs have taken hold again and are taking the market down on about 6 to 1 negative breadth. So far, the number of new lows is relatively light since we have not yet breached yesterday's low. Breadth is the giveaway that this is computer-driven rather than stock-driven.
After the big shift yesterday, it would not be a surprise to see another intraday shift. The sell programs have done their job of creating some panic, and now the buyers are starting to inch back in.
One new position I'm starting to build today is Arlo Technologies (ARLO) which makes security cameras. The company has transitioned to a subscription model and now has over one million paid accounts as of December 1. Lake Street put a $14 target on the stock this morning.
What is making this market so difficult right now is that stock picking of names like ARLO just isn't working very well. The big macro flows are pushing stocks around without regard to the merits of individual stocks. What looks good one day looks poor the next depending on what the computers are programmed to do. When volatility in the indexes is this high, good stock picking doesn't offer any real advantage.
