The aggressive rotation out of momentum and growth names into value stocks that has hit the market for the last two days has slowed this morning. There still isn't much bounce in the high-beta momentum names but they are finding some support. There are only about 70 stocks hitting new 12-month highs which illustrates how little chasing there is of stocks that are at their highs.
Breadth is running about 3650 gainers to 2900 decliners which is worse than what we have seen the last two days but the Russell 2000 ETF (IWM) is still outperforming.
Many traders were caught by surprise by the vicious rotation and are gun shy now about jumping back in quickly. This sort of rotation typically doesn't end that abruptly but there is still an appetite to put cash to work with the Fed interest rate cut on the docket in one week.
I've been focusing more on stocks coming off their lows rather than breakout plays. An example of one I bought his morning is Sundial Growers (SNDL) which was a cannabis IPO that has performed poorly. It is a good example of what is working in this market are not the typical momentum and breakout setups.
Another beaten up stock on my radar is Personalis (PSNL) which is presenting at a conference today and had some positive news earlier this week. The chart looks terrible but it is an interesting story and is testing recent lows in the $14 area.
This rotational action has created a lot of dangers for traders that typically trade momentum so it is important to move incrementally. There are likely to be continued reverberations in the near term.