The S&P 500 is hitting a new intraday low as the lunch hour comes to a close in New York. This is not a good sign as it is quite evident that even the dip buyers are too uncertain to give it a try. Breadth is very poor at around 4 to 1 negative, and the number of stocks hitting new 12 month lows has expanded to around 360.
The way to deal with this sort of action isn't complicated. We need to get out of the way and protect capital, however it is extremely tempting to look for an oversold bounce as things become stretched to the downside. The counter-trend rallies or 'snappers' as they are sometimes called, can be very big and quick. It is very rewarding to catch one when the action feels extremely negative but the timing is very difficult.
There was very similar action on Monday, May 13 after the Chinese announced retaliatory tariffs. There was steady selling all day and then a little bounce the next day. What was most interesting is the indices reversed strongly over the next three days and produced a classic V-shaped move.
I'm not counting on a V-shaped move this time but this is very gloomy and if there is a gap-down tomorrow morning I expect to see some dip buyers jump in.
I have a few things on my shopping list but I'm still not interested in doing any buying.