Rotation is the name of the game this morning as the indices are trading mixed on breadth of about 4300 gainers to 2750 decliners. The FATMAAN names are seeing outflows as both Apple (AAPL) and Tesla (TSLA) are in the red. Financials, industrials, and value names gapped up to start the day but are now starting to fade. Biotechnology (IBB) has bounced back after lagging badly yesterday.
What is most notable on my screens is how speculative chasing has slowed. There is only a small handful of big movers on the screen. There are a few things like NIO (NIO) and DraftKings (DKNG) that are moving nicely but it is very narrow. The stock picking is becoming much more difficult but there still isn't enough correlated selling to make me worried about the overall market. If breadth slips and the FATMAAN names stay weak then we will see some support levels start to fall.
I'm dinking around with a few bounce trades but I'm managing things tightly and am not building longer-term positions right now. I have my eye on a number of names I want to build if we have some deeper corrective action but I'm keep powder dry. I suspect when we do have corrective action, it isn't going to be the collapse that many bears are anticipating.
The S&P 500 is hitting an intraday low as I write and I'm increasing my caution. If the stock picking was better I'd be less concerned but when so few things are working well the risk of acceleration to the downside is higher.