A really bad day on the Qs on huge volume has put them in the red for 2014. Is this is an omen for more downside to come or will we see the usual dip buying and then a pop to new highs?
That’s the $64 question.
The market reversed its early gains and nearly closed on its lows again. The Nasdaq and the Russell 2000 are both trading below their 50-day averages. This increases the chance that the S&P 500 follows suit. The 50-day support for the SPX is currently around the 1834 level. That said, the bulls still have a potentially seasonally bullish April to look forward to. Most corrections for the last 2 years have been shallow, likely due to the effect of QE by the Fed.
“Weekend Risk” that is a term we often hear on tv as an excuse to why the market is selling off going into a weekend. The idea is that with the market closed for 2 days there is more of a risk of “bad” news causing a big gap down. Sometimes we actually see selloffs gain steam as Friday afternoon approaches. Traders see the market is selling off and fear they will not be able to get out ahead of a big gap down. Perhaps a large part of the reason that “weekend risk” is perceived as large issue is the Crash of ’87, which happened on a Monday.
Another red day and another day where QQQ and XLF were the weak sisters relative to other VEGA components….a bearish indicator. XLE and XLU were the VEGA leaders….and while XLU often operates in a momentum contrary to SPY XLE is a bit of a surprise, but the Crimea situation may still be stimulating uncertainty in the petro markets.
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