After watching the Nasdaq and small-cap indices drop over 5% over the last three days, traders were looking to catch a quick oversold bounce today but ended up with another disappointing session. We did open up slightly higher but were unable to gain any traction and quickly lost steam. After the midday fade we managed some buying in the closing hour, but it merely brought us back around flat.
It was not an impressive bounce. We simply relieved a little of the oversold pressure and took us back to resistance levels that invite more selling and/or shorting, for those of you technically incline. Sorry to repeat myself, but the dip-buyers who were so aggressive a month or so ago are no longer with us and bounces cannot be trusted to last for long.
The most important thing in this market right now may be to stay skeptical of strength, especially in stocks or indices that have had some technical breakdowns. Even the worst-looking stocks will deliver some upside and can be quite profitable if you catch them right. You just have to make sure you don't start convincing yourself that a broken stock or index is repaired if it bounces for a day or two.
Yes, I still think AAPL and BAC are compelling buys.
long AAPL ; long BAC
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