Well, DJ30 has recovered much of the losses, but the growth areas and even SP500 are still struggling with those gaps lower. The dilemma facing us is the gap lower is holding for areas such as chips, but they gapped significantly, making them not great entries.
Another issue is SOX gapped lower but is just over the 200 day MA. Thus, stocks such as LRCX are down hard, but these stocks may be close to finding some bounce support. GOOG is another example: gapped to the 200 day MA, undercut it briefly, rebounded to show a doji at that support. Not the best entry points from a probabilities standpoint.
That said, some of the stronger areas of late are struggling, and that would be software as it is tech/growth. NOW is struggling, WDAY is down harder. COUP is fine and MSFT not bad, but the point is the group is showing some strain.
Even NASDAQ gapped to a doji over last week's low. The oversold areas may be looking at making a stand. We will see on Tuesday, and with the size of the gaps lower, we are not too wild about trying to pull off a long shot.
Given the sharp moves to support that do not provide great entries, it could be there is at least an early move upside Tuesday. If nothing else we can use that as a better entry for downside positions as it takes back some of the gap losses today.
SP500 -18.69, -0.63%
NASDAQ -107.80, -1.38%
DJ30 -74.79, -0.29%
Jon Johnson, Chief Market Strategist
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