The second day of the month follow through was flipped on its head, and it looked as if the sellers were ready to step in. They did, but a midday double bottom has moved stocks off the lows. Not to positive but definitely mitigating the losses. Software stocks are still under the gun as CRM earnings approach after the bell, but most leading sectors have done a credible job of patching up the losses in the afternoon session. In any event, MS says this was a bear market rally and that it is now selling it.
SP500 -14.07, -0.50%
NASDAQ -25.55, -0.34%
DJ30 -226.81, -0.87%
We picked up CRM early and it has held the line well. AMZN, FB look solid, GOOG to a lesser extent. NFLX does not look great and considering closing it. We did close several software positions as those stocks started reversing last week's good moves. Did not want to stay in a lot of them if that was the new trade for the group.
QID bounced at an entry but backed off as NASDAQ recovered. If you are looking for a bit more hedge, you can pick up some of the options even if it has backed off some.
Why the selling? Any news? No, just a big reallocation Friday that could not hold through Monday. Growth does appear to be struggling more in terms of leaders taking on the most water whereas the older economy stocks are holding together better.
Jon Johnson, Chief Market Strategist
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