If not for a late afternoon rally, the NASDAQ would have been in full name technical trouble.
What’s full name trouble? I don’t know about you, but when I was a kid, heat was coming when mom went, “Richard” get over here. Again, unsure about your reaction, but mine was to think about all the things I did wrong so I could attempt a feeble defense.
Most of the time, the cause for “Richard” didn’t make the mental “what did I do list” and was a minor infraction by comparison.
The narrowly escaped NASDAQ’s full name trouble isn’t minor, and the consequences could be severe.
The tech-laden index looked like it was about to close at a definitive 52-week low, breaking the double bottom outside of what we’d consider the margin of error. Since it is playoff baseball season, it’s sort of like slightly fouling off the ball, it falling out of the catcher’s mitt with two-strikes, two outs in the bottom of the 9th inning and the game on the line, barely escaping certain defeat; for another pitch at least.
The odds are bears will try to bring the high heater (fastball) in the next day or two, in order to get the technical strike out. Much like our baseball metaphor, it will be game over if buyers swing and miss with the NASDAQ clearly setting a new closing low.
We’ll give it a little wiggle room for bulls to foul off a few more pitches, but if the NASDAQ closes below 10,500, then it is full name trouble with the index possibly shaving off 500 points quick, fast, in a hurry. That would put the NASDAQ at the psychologically important mark of 10k. Strikeout at 10,000, and the NASDAQ is back in the Covid-19 valley and if that trap door beneath our feet opens, ugh, we could be Tom Petty, Free Fallin’.
Welp, we sure wish there was more to it for us to discuss, but the current battle at the bottom is the only game worth watching. However, if stocks catch a bid higher in the near-term, investors might be wise to take the opportunity to raise cash by unloading underperforming holdings. The catcher probably won’t drop strike three next time and mom will be yelling, “Richard.”
Oil and Gas were the dominant performers last week with Marijuana poking its head into the mix. Both sectors were driven by news. OPEC decided to cut production by 2 million barrels per day and the Biden Administration pardoned lots of people convicted of marijuana possession.
Both could prove to be short-term stimulus, but if the markets continue to fall deeper into bearish territory, it would be hard for either, or any sector, to move against a strong current of selling.
Yep, you guessed it, no chance we are going to entertain any individual stocks until the market pivots higher for the next bull.