Early morning rise in futures and subsequent open to the market eventually caved and ushered in heavy volume selling. Markit released its PMI reading and it was slightly weaker than expected, but did not hold back the equity markets from rallying just after the opening bell. However, one could point to the awful reading on manufacturing from the Dallas Fed that had sellers running for the hills. While the pace of decline slowed around 1pmEDT the selling simply slowed as the markets closed just off the lows of the session. AAPL was able to hold off sellers as the market awaits its release of earnings. Remember, the market is going to rely heavily on AAPL to produce a solid quarter. Volume was up on the NASDAQ as institutions were selling down biotech today. Biotech not only took a bite of the NASDAQ, but was the main driver in the decline in the Russell 2000. AAPL may hold it together for the market, but the outside reversal in the NASDAQ on heavy volume is certainly concerning. This is how you do not want to start your week off by any stretch of the imagination.
The story of the session really is the fall in Biotech stocks. It was an impressive rebound off of the most recent selling, but after today IBB sits just at its 50 day moving average. Not to mention it now appears to be a double top pattern. Biotech’s have provided many people with fabulous gains. Is the sector about to rip them all away from those without an exit strategy? Best to stick with the price signals rather than hoping your stock will do as you wish. Hope is not a strategy of winning traders. Do not be fooled.
Small cap stocks were hit quite hard today in heavy volume. IWM has struggled mightily with hitting new highs as of late and now has put in quite a bit of churning. The ETF sits just above its 50 day as long term support, but sliced through its 10 day moving average without much resistance from Bulls. The next few days will certainly provide clarity on if we can continue to hit new highs.
Given the Federal Reserve will conclude it meeting Wednesday it is anyone’s guess how the market will react to the news. There is very little doubt in our minds the Fed will raise rates. We have yet to see the robust economic data to blow the socks off the Fed. Anything is possible, but with the Fed determined to be data driven there is not much data out there proving to them a rate hike is necessary. Stay tuned.
There were many reversals today and volume was up across the board. Distribution across the board on a day like today is not something you want to see. Perhaps this was a little month end clean-up for cash, but volume was hot and price action was downright awful. Is it enough to kick off a correction? It takes a little more than a day to make a market. Stay with Big Wave Trading to keep up with this market.
Aloha.
PS – don’t forget to check out Joshua’s weekly recap. Not to mention Past Big Winners. Learn how to spot and hold for the big gains by registering and becoming a subscriber today. Do not miss out on huge stock movers like VIPS.
