Unsurprisingly there was some dip buying on this big, ugly open but when there is a drop of this magnitude they don't stick around for long. This open was an opportunity for traders to quickly flip a few things. Longer-term buyers are much more hesitant about buying this sort of action.
The S&P 500 has already given back about half of its bounce but the big technical issue now is whether the opening lows hold. The longer the early support levels hold then the more likely that buyers will gain confidence and inch back in. If the opening lows don't hold that is like to trigger another round of selling.
The most important thing to keep in mind right now is that selling of this sort is index driven and is highly correlated. Everything gets dump together as ETFs and program traders sell big baskets of stocks without any regard to the individual merits of the stocks involved.
Breadth is running about 1200 gainers to over 6100 losers so there aren't many places to hide. Interesting, we already have more 12-month lows at 185 than 12-month highs at 160.
My game plan is to not get in the way of the index selling as I watch for entries in some of the individual stocks that I like. An example of one that I added this morning was Aimmune Therapeutics (AIMT) which should have FDA approval any day for its peanut allergy treatment.
One of the most interesting things about market conditions now is that there are many secondary stocks that were never as grossly extended as the big cap names. It is hard for them to rally when the market is being hit like this but there are some interesting charts developing. I suspect we'll see some opportunities in rotational action.
