Nasdaq: -90.06... S&P: -20.99...
We now know that yesterday's Nasdaq recovery rally was of the dead cat bounce variety because today it gave back all of yeterday's gains and then some. As you guys know, I've preached for years that its always the SECOND day that matters, not the rally day. The follow-through day is the most important.
Anyway, the Nazzy rolled over again and took out yesterday's lows. We will have to see if this is really the start of something bigger or just routine pullback in a market at the highs. Remember that this a bull market and dips always seem to get bought.
The QQQ took out the 50-day moving average today. That might not seem like a big deal, but the Nasdaq hasn't violated the 50-day moving average since December 2016.
The Naz held the first layer of support(yellow line) today even though it broke it earlier in the day and almost tested secondary support (red line). If the red line breaks, then we probably go down and fill the gap down around 133 (green line). I'm running out of colors, so I'll leave it at that.
The 3 green lines on the top of the chart represent a bearish head and shoulder pattern on the Nasdaq, so it's very important that the neckline of that head and shoulder pattern holds. I've found that in this bull market, most H&S patterns do hold that support. If not, we will have some problems.
The semiconductor and software stocks call the QQQ home, and many of them got trashed today. Below is a look at both the SMH and Software space.
SMH broke a 20-month uptrend today. We'll have to see if the bulls step up and defend it tomorrow.
Software has been a big part of the move in tech, and today it came down about 2%, but it did manage to hold the 50-day ma. Stocks like EBIX, SHOP, and AZPM came down hard. That chart looks like a double top, we'll just have to wait and see.
If you remember I mentioned that steel (SLX) and metals &mining (XME) did very well yesterday. In a bad tape today they were both virtually unchanged, so that's pretty bullish so far. We'll keep an eye on this group for opportunities.
Biotech came down a little over 1% but that's to be expected considering the tape today.
I added AZPN short and SOXS as a long today.
AZPN is in software and SOXS is the etf that gets you short the semiconductor space. I will have a short leash on both in case the bulls have a countertrend rally up their sleeves.