After the big move yesterday, I expected to see some signs that fear of missing out (FOMO) was starting to build. After all the Fed is now believed to be more market friendly and if there is one thing the market loves is a dovish Fed.
Instead, what we are seeing so far is some very nervous action. Market players are still not too worried that this market is going to run away without them. Given the uncertainty about how Trump's meeting with Xi this weekend may turnout that isn't too surprising. The potential for a negative reaction to the meeting is high.
In addition to the potential negative news flow, traders are also impacted by the fact that they have been burned a number of times recently when the have chased strength. The V-shaped bounces, that were so consistent for so long, turned into bull traps and now buyers are wary.
Breadth is running 2900 gainers to 3750 decliners, but, interestingly we have 45 stocks hitting new highs and 45 hitting new lows. The FAANG names are under pressure again which is a problem especially since Apple (AAPL) is leading to the downside again.
I am focused on stock picking which remains very difficult. A few names on my radar right now are NIO (NIO) , NII Holding (NIHD) , Zogenix (ZGNX) and Affirmed (AFMD) . There still is very little but there are some signs of support levels. Tight stops are imperative.
This market is still very nervous and uncertain but with the Fed softening its stance there is a better chance of downside support that holds.