Not the start to the week bulls wanted to see with many growth stocks getting hit. Most notably would be BYND. The IPO announced a secondary and is looking to continue its slide lower. The NASDAQ Composite index slid 44bps while volume on the NASDAQ fell. NYSE volume rose when compared against Friday’s level, but the S&P 500 only fell 16bps avoiding a day of distribution. On the other hand, the Dow Jones Industrial Average was able to sneak away with small gains. Certainly, the hit to some growth names is something to keep on eye on as we close out the month of July. No matter what your persuasion is regarding to the direction of the market we must focus on price action. Execute the plan with flawless precision and follow the stock market wherever it will take us.
It is hard to believe, but the current economic expansion is 121 months old. Not many people believed it at the time in 2009. Given the circumstances it was hard to believe we would see a turnaround at all. However, we are here and after 13 years of economic expansion people still cannot stand this stock market. Sure, the Investors Intelligence survey is bullish as they always are and will be for as long as we are trading. AAII and what we see on Twitter continues to be astonishing. Bond fund flows too. There will be a time where this current economic expansion ends. When will it end? Will the stock market roll over and correct with it? We don’t know the future, nor do we pretend to think we can predict it. We want to follow the stock market wherever it takes us.
What is interesting to us is despite some growth names getting hit we do have some new long signals. It is possible we are just seeing rotation into new names. It would not be the first time in this bull market we have seen the market shift to other groups. Therefore, it pays to follow price rather than simply predicting the end of the rally.
AMZN dipped below its 50-day moving average briefly on Monday but held the important moving average. Good to see. NFLX continues its woes backing away from an obvious resistance level. GOOGL is holding its gap from earnings. A good sign for the stock as we would like it to build in a consolidation period here. AAPL reports after the bell. It will be interesting to see how the stock reacts to earnings. FB is getting sloppy after earnings and will need some help to reverse its fortune. Not all gloom and doom in the NASDAQ.
We must forge on and continue to manage our risk properly. The FOMC on Wednesday will add a bit of volatility, but this is to be expected. Go out and have a great trading session!
