Monday, June 03, 2019

Nasdaq Suffers Heavy Selling

Rumors of antitrust probes for Facebook and Google put a weak market under further pressure. The Nasdaq took the brunt of the selling on confirmed distribution. In the case of the Nasdaq I have redrawn the downward channel line which will place today's lows at support of this channel line.

The Semiconductor Index wasn't impacted by the selling but there was also a lack of confidence on the part of buyers to return the index above the 200-day MA. The possibility of reversing a 'bear trap' remains a reasonable play to watch for (which would also go with an upside channel break).

The S&P closed with a neutral doji, suggesting today's selling in Facebook and Google wasn't reflective of broader market conditions. As with the Semiconductor Index, watch for a possible 'bear trap' reversal return above the 200-day MA.

The Russell 2000 was the only index to close higher. It does trade well below key moving averages (20-day, 50-day, 200-day MAs) but in the absence of concerted selling (distracted by the Nasdaq and SPX) there is a chance for a nascent recovery above trading range support.

For Tuesday, look for 'bear traps' in the Semiconductor Index and S&P given their respective proximity to their 200-day MAs. The Nasdaq is likely to see some follow through lower based on Google and Facebook action, but both stocks will prove attractive for those looking to buy-in at a discount.

You've now read my opinion, next read Douglas' blog.

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Investments are held in a pension fund on a buy-and-hold strategy.