The recent pattern of the trading action has been selling into strength that then leads to lower lows. Of late, this has been happening on an intraday basis, but Wednesday we went the full day before the selling hit again Thursday morning. It was a classic oversold bounce within the context of a correction.
The question now is whether Wednesday morning's lows will hold. For the S&P 500, that key level is around 4435.
Breadth is poor at around 2,350 gainers to ,decliners. We have more new 12-month lows than new highs this morning, which is the first time that has occurred in a while. That is just an illustration of the corrective action playing out.
Despite the steady selling so far Thursday morning, there is some speculative trading taking place. Traders continued to be focused on de-SPAC plays that have had heavy redemptions. These stocks have very small floats and can be moved easily. When that is combined with a "gamma squeeze," there can be tremendous moves.
IronNet Cybersecurity (IRNT) has been the main target lately, but there are others such as Offerpad Solutions (OPAD) , Spire Global (SPIR) , AgileThought (AGIL) , TMC the metals company (TMC) , and Helbiz (HLBZ) . They are extremely volatile and are tantamount to a slot machine, but they are keeping some traders busy.
One de-SPAC that I've been buying is Metromile (MILE) . The company offers car insurance that is priced by miles driven. It was sponsored by Mark Cuban and Chamath Palihapitiya but tanked when the "reopen trade" took hold and slowed down its growth.
MILE stock looks washed out here around $4.15, and I expect it will slowly regain some interest in the third-quarter report. The company has around $250 million in cash, which is a bit less than $2 per share and currently has around $110 million in premiums in force.