Midday Market Commentary For 04-04-2014
The old saying, “if it is too good to be true”, seems to be what the market is telling us by the midday. Moderate losses for the large caps and heavy ones for the small caps. The question now is how much of a correction are we going to see. The ‘guess’ has been 10 to 40 percent and I am glad to have put away some extra cash as there is going to be some terrific buys in the future.
The market hasn’t really crashed – yet anyway, but I am using the photo below to grab your attention.
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We have been warning of a correction for several weeks and it has started.
First Nasdaq Stock Flash-Crashes, Now The Nasdaq Index Is Crashing
UPDATE: Nasdaq negative year-to-date; Biotechs 3-month lows. AMZN, FB, TWTR, NFLX, P all in Bear market territory.
Shortly after 946amET, the stock of TheNasdaq OMX Group suddenly dropped in a mini-flash-crash from from 35.98 to 35.00 in just over 2 seconds on approximately 100,000 shares.
As Nanex notes, this is what high-frequency-trading liquidity looks like. But now, an hour or so later, the Nasdaq index and most especialy its Biotech and high-growth names are being crushed.
Biotechs are near 3-month lows, Momos are down 16 to 18% since FOMC, and Nasdaq is about to go negative for the year.
The short term indicators are leaning towards the hold side at the midday. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The 50DMA, volume and a host of other studies have not turned, only a 6% correction (and recovery) and that is not enough for me to start shorting. The MACD has turned down slightly, but remains above zero. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 16 % buy. (Remember this has been negative for weeks.)
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