Market breaks down sharply
After grinding higher day after day which seemed like eternity, the SPX finally broke down and closed just above the 21 day moving average. This rally has been six weeks old since the start of 2013 and there has been no rest in between. This was not an unexpected move. You probably knew it would happen.
As the market grinded higher we didn’t feel very comfortable with the price action in some stocks. There was no real push in the tape. AMZN, GOOG and some other leaders were giving signals and towards the close they broke down. Market timing is everything, if you can see what is coming ahead you can take action. But seldom you can see the move. This move was not a gap down early in the morning, this was a sell off towards the close.
GOOG made new highs at 808 and than reversed hard today into the close. Looks like there is more to come and it will give a nice opportunity to buy into it when the dust settles. This is what these sharp market reversals do. They hurt your positions and longs. NFLX also fell hard reversing 9 points in short few hours and that will enable all the moving averages to catch up with it.
AAPL as usual went further down on the FoxConn hiring freeze news. This is no surprise since the stock is still in a severe downtrend which is governed by the the down trend line on the right. Unless there is a catalyst and the stock breaks the trend line it is going nowhere.
With the general market action dominated by a huge bearish candle today, a follow through should be in the cards rest of the week. The market will come back but a healthy correction is must as it gives an entry into the overpriced assets.
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