While This Market Action Makes for Some Tough Trading, It's Nothing Unusual

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Opening strength was aggressively sold this morning which is the fourth time in four days that this occurred. One of the primary signs that the market is struggling is intraday reversals. Indices hit a high early in the day, and then aggressive selling kicks in and stocks close weak. That has been the pattern all week.

While this action makes for some tough trading, it is nothing unusual. We have needed some corrective action, and what better time for it to occur than in the weakest month of the year?

One shift I see today is that some of the supporting bids have disappeared. This causes some sharp dips in thinner stocks, but there are still are very few signs of panic. Breadth isn’t bad, with around 3300 gainers to 4550 decliners and there are around 150 new 12-month highs.

Pockets of speculative trading are narrower, but the appetite for action has not disappeared. One of the main reasons I don’t think that this corrective action will go that deep is because of retail interest. There is a good supply of traders that are going to go to work when they see better price action.

A couple of names I’ve been adding are ProQR Therapeutics (PRQR) which announced a deal with Lilly (LLY) yesterday, and Butterfly Network (BFLY) , which has been trading well following a strong earnings report on August 23.

One position I am building up quite a bit is a sleeper, Performant Financial (PFMT) , which audits medical billing for Medicare and insurance companies. This is a big business and not well understood. PFMT has transitioned from debt collection to auditing of medical billing, and the story is not yet known by the broad market. The stock is languishing now, and I’m slowly building my position as we await some news on contract wins.

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