Declare Tuesday Mini-Realization Day: Tech Stocks Slumped
The IGV chart broke. The QQQs fell for a fourth straight day — that hasn’t happened since about a week or so before the April low.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Someone asked me about a stock chart on Tuesday. The stock is down nearly 40% in a month and she wondered whether she should just sell it before the major indexes catch up to it.
Just over a week ago someone asked why the S&P kept going up but his portfolio kept going down.
Those two situations are what we have seen in the market over the past six or seven weeks. They are what real portfolios look like when breadth isn’t so hot (under the hood as I call it). It is those real portfolios that make up my indicators.
So when I say, as I think I have said for so many days (weeks?) now, that my indicators haven’t changed, the indicators are simply reflecting the portfolios out there that weren’t centered on the Favored Few.
But something did change on Tuesday. You know that chart of IGV I keep showing? It broke. You know those charts of the SOX relative to Nasdaq that hasn’t made a higher high since early July? Folks noticed it. You know those charts of the Bank Index relative to the S&P that hasn’t made a higher high since July? Folks noticed it.
The SOX got sold. Fan Favorites got sold. Did you know the QQQs are now down for four straight days? Do you know that hasn’t happened since before the April low (about a week or so before)?
What changed on Tuesday was that folks finally noticed those tech stocks haven’t been so great lately. Maybe we should call it a Mini-Realization Day.
Notice that the volume in the QQQs is the highest since those two down days in late July/early August. Yet overall Nasdaq volume did not rise on Tuesday. I mean when Nasdaq trades under nine billion shares these days, I consider it light(er) volume!
Notice too that for all the talk of group rotation (and there is some!) Nasdaq’s McClellan Summation Index never ticked up during that last run upward. And it is still declining.
So when I say the indicators haven’t changed, this is what I mean. The number of stocks making new highs is still paltry. The new lows haven’t really climbed much in the past week or two (since we rallied from that short-term-oversold condition). There has been a lot of sloshing about in the indexes, but under the hood, there has been selling.
I would say the good news is that everyone noticed the tech-stock selloff. The bad news is that this selloff was long overdue.
