Markets fell precipitously Thursday with the leading Nasdaq took the hardest blow. We have been throwing caution into the wind recently because of its wayward ways. When leading benchmarks start acting frail it is time to pay attention. Sure semiconductors have received some recently, but leading software and internet groups have softened. Sure the Nasdaq is still outperforming the S&P 500 on a YTD basis, but it is starting to wane. Going into Friday the Nasdaq is looking to make it 3 weeks in a row of underperforming the S&P 500. After Thursday close it is 1.8% lower, while the S&P 500 is 1.7% down for the week. The Nasdaq is lower for the fifth time in 6 sessions and today recorded a bearish engulfing day. It stands 1% away from a 50 day SMA test. From individual names I have seen some very weak technical action, and when you see vulnerability in leading stock, that usually is good foreshadowing of negative things to come. To give a couple of examples I was very bullish coming into this week as two stocks had been been trading extremely taut right at all time highs. Often this type of consolidation is an excellent sign. Looking at FLS and Q weekly charts, coming into this week saw FLS close three straight weeks within .40 of each other, and Q within .22. Both this week are down roughly 6%, an ominous sign. SCTY is an example of more breakouts failing, throwing up more red flags. It took out a 79.96 flat base pivot point on 2/25 and is now below that and lower 9 of the last 10 sessions.
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