The indexes gapped higher to start the first market session of 2023, but after a 10-minute rally, the selling hit, and the Nasdaq 100 (QQQ) dropped about 1.5% and is leading the market lower with a loss of 0.7% as a write this.
Breadth is still holding up, and the number of new 12-month lows is quite small, but it is the big-cap technology names such as Apple (AAPL) , Nvidia (NVDA) , Qualcomm (QCOM) , Netflix (NFLX) , and Tesla (TSLA) that are weighing on the market.
Pockets of momentum are quite narrow, with a few China-relative and biotechnology stocks making moves over 10%. There were very few names at intraday highs an hour into the day.
Basically, this is the same sort of action that we saw many times in 2022. The change in the calendar hasn't done anything to change the character of the market action. That is not a big surprise, and it was unrealistic to expect a sudden major shift, although it doesn't do much to improve the market mood.
The basic problem is that we are still in a bear market. In bear markets, strength, as we saw at the open, is an invitation to sell. It is much harder for fear of missing out (FOMO) to develop. Those that are holding long positions are more concerned about being trapped in a reversal rather than missing out on strength.
My best advice is to stay patient and focus on very short-term trades should you feel the itch to do something. We do not have good technical setups if your time frames are longer than a few days.
My Stock of the Week, Replimune Group (REPL) , is a good example of a great chart that is at the mercy of overall market conditions. In a better environment, this would be a great potential breakout play, but in this market, the stock just can't attract sustained buying to produce positive momentum.
Eventually, the good charts will work again, but we need the mood of the market to shift first.