As I discussed in my opening column, conditions are good for a bear market bounce, and it is quickly gaining traction. The primary tip-off was that stocks are not selling off on bad news.
Nvidia (NVDA) is probably the best example of that right now. It was down Wednesday night after it cut guidance but is now trading up around 4%. Also, the retail sector has rebounded after taking a pounding.
The big question now is how far can this bounce run? Counter-trend bounces can be very strong as they are driven by a combination of fear of missing out, underinvested longs, and short-squeezes. Typically, a good counter-trend bounce will start a spate of predictions that the bear market is over and it is clear sailing to the upside.
There is no need to worry about that right now. Just make sure that you keep stops tight and take some partial profits into strength. Charts still need quite a bit of work before they present better long-term setups.
I've been a buyer this morning. I took an index long and added some positions in names, including Airbnb (ABNB) , urban-gro (UGRO) , Ondas Holdings (ONDS) , Alto Ingredients (ALTO) , Kosmos Energy (KOS) , Eastman Kodak (KODK) , Magnachip Semiconductor (MX) , Veru (VERU) , and a few others.
I may flip parts of these very quickly, but we will see how sticky this action stays to the upside as the day progresses.
Bear market bounces offer some great opportunities, but it is extremely important to manage positions closely and not be lazy about taking gains and cutting losses.
(Please note that due to factors including low market capitalization and/or insufficient public float, we consider UGRO to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)