More Concerns But A Few Bullish Nuggets Too
On Monday I wrote about my growing concerns about a 10%+ stock market correction. I certainly didn’t mean for that to begin the very next day. While the Dow was only down a few points and that’s what most people will see, the NASDAQ 100 plunged 3% which is a very big move for one day. Gold and silver fell sharply. Bitcoin dropped too. However, there were an equal number of stocks going up and down.
Make no mistake about this. I do not like the set up in the S&P 500 nor the NASDAQ 100. If the bears are really ceding control, the action should lead to a move below the June lows in these two indices.
The Russell 2000 and S&P 400 have different looks. They are healthier and do not portend more significant downside. In fact, weakness should be bought.
Before someone asks, here is the high beta, riskier stocks versus the low volatility stocks. It falls somewhere in between the NASDAQ 100 and Russell 2000 behavior-wise.
Finally, let’s look at the NYSE A/D Line for signs of waning participation and a possible start of a bear market. The S&P 500 is in the upper chart below. The NYSE A/D is below that. The latter is actually stronger than the index which is a good sign and usually insulates the stock market from something more nefarious on the downside.
Overall, right now, the decline looks like a pullback to buy, but I do not have high conviction. Let’s see if the bulls have any real juice today.
On Monday we sold ARAY, GWRE, TTWO, LRN, some MQQQ, some QLD and some PANW. On Tuesday we bought SPCX, more MQQQ, more QLD, more RAIL and more BUG. We sold PCY, EMB and TQQQ.
