The bulls found themselves trapped once again Wednesday morning, but the selling isn't quite as intense as we saw on Monday, although breadth is worse at around 1,000 gainers to 6,700 decliners. We still have only 230 new 12-month lows, which is a reflection of the fact that many stocks have already found some support.
I focus more on smaller and secondary stocks that have higher levels of volatility, and my screens are showing some decent relative strength. There is plenty of red but not much panic-selling. The FATMAAN names have already bounced and are mostly in the green now. Cryptocurrencies are on fire after news that George Soros is actively trading that market.
Pockets of momentum are limited, but there is some OK action, especially in crypto miners. Oil and gas names are looking toppy, and I closed out my natural gas exposure.
I've added to a position in drone play, Ondas Holdings (ONDS) , and remounted a position in lithium miner Standard Lithium (SLI) . I have my eye on some smaller stocks if they fade more, but that isn't happening so far.
The close is the key Wednesday. If we end up with a close near the highs of the day, that would be a strong sign that we are hitting bottom and starting to turn up into third-quarter earnings.
I remain quite optimistic about the trading that lies ahead.