Thursday recap: A few nuanced technical inconsistencies have turned into what looks like the beginning of the most significant stock market correction we’ve seen since last October.
I know, I know…
Calling for a market top, or even a stock market correction has been a complete fools game for years and I’m not saying it will be another 15 before NASDAQ closes above the 5100 barrier, but Thursday’s stock market from dawn to dusk was as ugly of a day as we’ve had in at least 6 months.
Stock Market Correction or Buying Opportunity?
The Reality is, a few subtle hints from early in the week are now waving their arms and screaming “Danger Will Robinson!!” as loud as the iconic robot from the 1960s treasure Lost in Space. Google it if you’re under 40. The reruns were very popular.
Wait!! Is that an I-watch Dr. Smith is wearing?
How did we get here: Basically during the last 2 weeks+ we’ve seen the unwind on a handful of very crowded trades that has resulted in very high levels of one way volatility. To be effective in this stock pickers market your trading plan need to be clear if you are long/short or only one. Other wise you will get whip-sawed.
In the FX markets the US$/€, and €/¥ moves have coincided with a sharp spike in yields around the Eurozone, The 10 yr German Bund yield has shot from +0.05% to +0.35% without a breather, and the German DAX has had an 8%+ correction. All of this within the last 2 to 4 weeks!!
Many novice investors and traders are learning that it’s OK to go along for the ride in a very crowded trade, only If you’re nimble enough to make an early exit.
When the bell rang at 4:00 PM Market Averages had declines of 1% to 2%, but investors weren’t even “Saved by the Bell” at 4:00 PM, as LNKD sank 25% in after hours trading after giving disappointing guidance for the remainder of 2015.
LNKD, Linked in Stock Plummeting on earnings. (thestreet.com)
NEW YORK (TheStreet) — Shares of LinkedIn Corp. (LNKD – Get Report) are plummeting, sharply down 26.5% to $189 in after-hours trading on Thursday, as the professional networking site issued a weak second quarter and full year outlook.
For the second quarter, the company sees earnings of 28 cents per share on revenue of between $670 million and $675 million. Analysts are expecting earnings of 74 cents per share on revenue of $717.5 million.
Clearly this was not a good week for Social Media names, as the carnage there and in Biotech led NASDAQ -1.6% on the day to 4941.
The Russell 2000 was even worse, -2.2% to 1220 ending the Month with the largest declines of any market index -2.5%.
The DJ Transports -1.25% at 8592 actually has a far worse looking chart than the Russell, as it closed the month -1.7% and is 1.3% below its 200 day MA.
A few daily closes below the critical 8500 – 8550 level would finish off a classic 8 month broadening top in the Transports, and the volatility in Oil notwithstanding, it just can’t be ignored.
The DJIA and S&P 500 each had declines of ~1% as they were buffered somewhat by the Oil continuing to move higher, and a sharp move lower in the US Dollar after 5% over the prior 2 weeks.
Investors and Traders may very well be wishing May Day was a holiday here as well as on many other parts of the globe, as it’s hard to imagine a relief rally to end the week, unless it’s sparked by much lower prices in morning trading.
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