The story of the day was certainly the big guns falling from grace sending the NASDAQ lower on increased trade. Advanced retail sales came in better than expected as a warm March helped lure buyers out of their homes. Empire manufacturing disappointed as the index failed to meet expectations. The NYSE held up considerably well despite the sell-off in some big technology names. NASDAQ undercut last week’s low and we are now searching for Day 1 of an attempted rally and with the recent moves in some names it appears we’ll be waiting some time for a new rally. Big Wave Trading’s market model is now in sell mode and we’ll trade accordingly.
All the talk about Facebook (FB) coming to market in May and that it would help reduce the risk of a market sell-off. As it stands now AAPL and GOOG appear they continue want to push lower forgetting about who will win the race to $1000. Not to be outdone PCLN is also in a race to $1000, but has come under some serious selling pressure along with AAPL and GOG. These big name technology stocks are signaling institutions are selling their holdings sending a clear message of caution ahead.
The number of stocks below their respective 20 and 50 day moving averages remains quite low for the market. Last week we the number of stocks below their 20 day down to 13% and it isn’t conceivable we can see this figure revisit last week’s low. While we are oversold these conditions can become more extreme. Last week the McClellan got down almost to a -400 reading, but it only stands at -131 now. Just because we may have some oversold conditions doesn’t mean it can’t get worse. Weakness among the big boy leaders is not a very good sign for this market.
Our market model is in SELL mode and we’ll act accordingly. The NASDAQ was unable to hang onto its 50 day moving average and appears it wants lower prices ahead.
