The market is more confused than anything else today and the very choppy price action is creating additional concern.
The indices are well off their early lows but the pundits are having a hard time explaining how central bank easing and lower rates are suddenly a market negative. Markets have been celebrating an endless flood of cheap capital for years but today the sudden collapse in rates caused a different reaction. The fear is that low rates no longer are an effective tool against a slowing economy. Rates are being pushed down not because they will stimulate additional growth but because they are needed to keep things from growing even worse.
Market players are trying to sort this out and - as the old saying goes - the market hates uncertainty. It is not clear that rate cuts are the great positive the market has been anticipating since Powell turned dovish late last year.
The only effective way to deal with this confusion is to stay focused on the price action. It is quite chaotic today as the market tries to sort it out but the big bounce off the lows is a sign that the recent lows may hold. We will have to stay very focused on those lows. If they do not hold, sentiment is going to become ugly quite fast.
One positive is that stocks are not moving in a highly correlated fashion. There are some pockets of strength and I have a long list of names that are up over 10% today. Many of then are small caps that had good earnings but at least that matters.
I've done a little buying in stocks that have been knocked down unfairly. One low-priced name is Inseego (INSG) which had a slightly disappointing report but is ramping up its 5G products as the roll out picks up steam. I also added to Pesonalis (PSNL) which is engaged in cancer genomics and gene testing. Two competitors in that field - Guardant Health (GH) and Invitae (NVTA) had strong reports last night.
If the macro issues calm down there should be some good trade opportunities but the swings in the indices make it challenging.