Wednesday the NASDAQ took another beating, and extended the losing streak to five sessions one of the longest losing streak in more than five months.
Combined with nervousness in Europe, more flight “flight to quality” occurred as the yield on the ten year note fell below 2% again. In addition the Dollar and Yen gained ground on the Euro.
The reason given for the selloff was that Apple, the darling of the stock for months has given back more than $75 billion of its cap in less than two weeks. Apple makes up over 16% of the NASDAQ index and is now pulling the index lower.
On the European front Spanish bonds tumbled as Economy Minister Luis de Guindos declined to rule out the need for a bailout similar to what Greece got earlier this year. He cited a figure of greater than $13 billion dollars.
Add this to fact that earnings season is now over and we don’t have a catalyst to go higher you have the perfect brew for a long overdue selloff.
The CBOE VIX index has come off of the mat in the last five trading days and advanced more than 8% to 20.39. This may seem like a huge percentage gain, but much of the increase is the fact that the index has been at its lowest level in more than six years.
Now suddenly bad news is bad. Good news isn’t as good as it should be and the markets are retreating. I have seen this cycle many time before and I have learned that we must react to what the market is telling us.
Is this the beginning of a trend change?
Is fear going to overpower greed?
Many investors have been looking for a retreat to put money to work should we be buying here?
The market will answer these questions for us, and my technical analysis will help you to decide which way to go. To learn firsthand how I trade markets that are coming of highs, speak to one of my representatives and sign up to work one-on-one with me here:
Keep those stops tight.
Todd “Bubba” Horwitz
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