Europe continues to stumble despite the ECB’s pledge to begin its own Quantitative Easing program. After today’s session the stock market is now in a precarious position. If we do not rally and rally well off these lows could be very dangerous for those who continue to be levered long. Even GPRO could not overcome the selling as the stock closed well off its high of the session. TLT showed many investors fleeing to bonds despite yielding only 2.36%. This market is in need of support and rather quickly. Otherwise we will likely see further selling. As we have been noting as of late it is prudent to tread carefully.
Two stocks in the NASDAQ 100 we are watching are AAPL and GOOGL. Both account for 17.5% of the NASDAQ 100 and are nearing critical levels. The NASDAQ is market cap weighted and when these big cap stocks move they take the index with them. If both of these technology giants push lower you can almost guarantee the NASDAQ will follow right behind them. The next few days will be critical for these two stocks as well as the market.
There are quite a few oscillators in oversold territory, but not all are at extremes. Many will look to BTFD and we have seen plenty of folks over Twitter and Facebook calling to BTFD. What is funny is when you ask to quantify buying the dip no one really can provide you with an answer. Those who were BTFD must have last Thursday’s low hold. If it does not the flood gates to selling could certainly open up and wipe these eager beavers out. We can only hope they have an exit plan in place to avoid a GTAT where you lose 85% in one day.
Over the next few days we will need to see this market hold a rally. Otherwise it could get very dangerous for those who are long this market without an exit strategy. Make sure you know where your exits are and obey the signals. One more thing: do not try and be a hero and think you can bottom tick this market. Tread carefully.
