The 2-day bounce in stocks on lower volume was sold hard end of the week. Friday it feels like we are right back to where we left off on Monday as the selling intensifies. Many high growth stocks are getting hit hard, as well as biotechs which are down across the board. Aside from the S&P 500, the NASDAQ, small- and mid-cap indexes remain below their 50-day averages and near the 200-day. As such, S&P may continue to follow lower.
Thursday selling theme was repeated on Friday with QQQ and XLF leading the charge down (see VEGA below)….the exact opposite of what a bullish momentum model should look like. Some of the big momentum movers are taking heavy hits while many of the large cap “value” stocks are actually remaining relatively strong…that’s a good sign.
We still haven’t seen any suggestion of a selling climax via the NYAD although the VIX has been in a steady grind up.
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Strong selloffs to low levels during long-term uptrends often generate favorable buying opportunities. Quantifiable Edges had a number of studies that triggered on Thursday afternoon that exemplified this concept. Below is just one example. It examines 2% drops that close at both the bottom of their daily range and their 10-day range. Read the rest of this entry »
Wednesday saw the market rally strongly, but the overnight Odds suggested a possible short opportunity. Let’s take a look at the Odds Sheet, then I’ll discuss how I handled it, and how it played out. Read the rest of this entry »
Although April started like the uptrend would resume, the pressure that has resurfaced in the NASDAQ and Russell on Friday is much larger compare to recent reversal days. The rotation into more defensive areas of the stock market could just be initial complacency. The risk remains that the selloff in the high growth stocks spreads to the overall market.