Dan Stewart CFA®
President/Chief Investment Officer
NorAm Asset Management
Friday was a tough day for the growth stocks and high flyers. Everything from biotech, to 3D printing, to cloud computing, to solar, to Facebook (FB) and Chipotle (CMG) all got taken to the woodshed with intense selling. Certainly glad I sold my CMG & FB a week ago protecting profits as the selling continued into yesterday.
The markets experienced another broad selloff with the Big 3 major indices losing around -1%. Less than Friday and better than a poke in the eye, but painful nonetheless.
While the DOW closed near its lows of the day, the bright spot was the NASDAQ. Declining issues easily outpaced advancing issues with decliners 71% on the NYSE and 74% on the NASDAQ. But Down Volume actually was more intense on the NYSE registering 81%, but only 72% on the NASDAQ. Total volume was down from Friday.
The NASDAQ reversed mid-afternoon recouping almost 1/2 of its losses and closing almost at mid-range for the day. The NASDAQ remains below its 50 day moving average (50 DMA).
The NASDAQ neared strong support at 4050 hitting 4052 and quickly reversed higher. I have attached a 1 year and a 1 day graphs of the NASDAQ so you can visualize what I am talking about. We are by no means out of the woods or the woodshed and the NASDAQ needs to reclaim its 50 DMA, but the reversal is a constructive sign.
The S&P 500 had a similar experience but bounced off its 50 DMA and was able to hold the line. So even though it was tough day overall, we may be getting close to final capitulation this round.
Once again, any rebound rally needs to be measured for intensity. You need to identify whether it is institutional buying or retail buying to determine sustainability.
Today earnings season officially kicks off with Alcoa (AA) reporting after the bell. No professionals really put too much emphasis on AA anymore, and the important earnings will begin Friday with JPMorgan Chase (JPM) and Wells Fargo (WFC).
For a complimentary portfolio review, e-mail me at Dan.Stewart@NorAmAsset.com and we would be happy to review positions. We can evaluate your sector exposure and individual stock risk.
We have 2 economic reports today on small business optimism and jobs openings. We have 1 company, Alcoa (AA) reporting on the S&P 500. We have 6 companies reporting in the broader markets but none of significance. The 2 most notable are listed below.
Remember to tune into The Wall Street Shuffle Saturdays on 1190 AM at 10 a.m. in DFW. We have a financial and market focus.
I hope you enjoy the show. If you have any investment questions you would like discussed on the air, just e-mail me a firstname.lastname@example.org and we will address your questions.
If you have any specific investment questions in which you would like personal advice, e-mail me at Dan.Stewart@NorAmAsset.com and I will be happy to respond.
Dan Stewart CFA®
NorAm Asset Management
Economic Reports Today:
NFIB Small Business Optimism
JOLTs Job Openings
Some Notable Earnings Reports Today:
Alcoa (AA – after market)
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