Yesterday’s gains were quickly erased today by heavy volume selling. There was not much to cheer about except GPRO continuing to add to its gains. Sellers were in complete control of the market for much of the day. Buyers were simply absent and were not around to support the market. Even during the final hour there was some hope, but it quickly gave way to sellers heading into the close. It is never a good sign the market can sell off so quickly after the prior day was decent. We are in the midst of a weak seasonality period of the market and today’s move does not come as a surprise. Given today’s move it is quite clear we need to heed our model’s SELL model and act accordingly.
From the open sellers simply hammered the market lower. AAPL was a big stock down in heavy trade today. Many are blaming a buggy iOS8 as the issue for the stock today. One simply has to see how the stock has been trading and would know there were plenty of warning signs. There are clear signs of distribution and the lackluster price action was a clear warning sign. AAPL was not the only stock moving lower, but the stock does account for a big portion of the NASDAQ 100.
There is such thin leadership within this market it is not a good sign as we move forward. It may take some time for new leadership to develop and push higher. WAGE was a stock yesterday looked as if it was going to be a standout. Today’s move does not instill confidence we will see this stock move higher. FEYE was another stock we identified and it too was not immune to today’s selling. Hey, at least GPRO held up right?
As we check out sentiment it remains with a bullish tint. NAAIM exposure index moved lower below 60, but extreme bullish bets still existed. There are still active managers who are 200% long this market. Over on the AAII survey bulls remained on top capturing 41% of the survey. Those who were neutral dropped below 30% while bears jumped up to 28.2%. It would not surprise us to find these sentiment indicators very bearish next week. Given the recent moves in the market it will likely scare a few into the bear camp.
Tread carefully as we continue to progress through this difficult week in the market. Be patient and let prices dictate–not opinions–trading decisions.
