Market players were expecting some profit taking following the big move over the past week but the selling accelerated much faster than many had anticipated and that is creating some fear. There isn't any obvious catalyst for the selling but there are a confluence of negatives including intense chatter about the inverted yield curve, worries about any real progress on trade, technical damage as we give back the entire post-G-20 move and general concerns about the economy.
My test of market health was the development of better stock picking and that simply has not happened. We need stocks to find support levels that hold so there is a foundation for recovery but the foundation keeps falling apart.
We have to see an end to the correlated selling as a first step and we are seeing the exact opposite. This selling is index driven and most stocks are moving in tandem. Breadth is running around 1,500 gainers to 5,720 decliners and new-12 months lows spiked back up over 250.
There are no safe havens right now. Recently banks had shown some relative strength but they are leading to the downside now. Gold is finally acting like a safe haven but that isn't a particularly healthy sign.
I'm standing aside and watching to see if some support can kick in soon. The selling is intense enough to setup a snap-back but I'm not rushing to catch it right now.
There are some tremendous bargains developing but as the old saying goes, cheap stocks can get cheaper. Stay patient.