We have a little bounce action following the terrible action on Monday, but it is losing steam quickly and lacks energy. Breadth is about 3 to 1 negative, and the number of new lows has shrunk to around 650 after hitting 3000 yesterday, but this bounce isn't creating any 'fear of missing out' so far.
Yesterday was probably the most emotional day of selling we have seen so far in the current bear market cycle. There were forced liquidation and some signs of real panic. Many stocks were totally bidless, and people were willing to escape at any cost.
Action of that sort is indicative of a potential bottom but what often confuses the situation is that there are many short-term traders that simply want to catch an oversold bounce. They will waste no time selling into strength, and this is what kills bounce tries like we have this morning.
I can't stress enough the importance of patience while this corrective process plays out. The key is to hold high cash levels and not worry about trying to buy the exact low. This market is going to continue to struggle for a while, and it is best to just embrace that fact.
The good news is that there are some exception opportunities developing. The bad news is that the timing is extremely difficult, and if you act too soon, it may be costly.
I made one small new buy today in biotechnology name, Myovant Sciences (MYOV) , which has had positive news but was pummeled by weakness in the biotechnology sector. I left plenty of room to add to the position further as the chart develops.
