Selling Broadens as Big-Cap Tech Fails to Recover in 'Unpleasant' Action

The market's poor reaction to a less dovish Fed and disappointing earnings from Microsoft  (MSFT) and Meta  (META)  broadened as the day progressed on Thursday. The DJIA and the Russell 2000  (IWM)  exhibited relative strength early, but selling pressure steadily increased, and the indexes closed near the lows of the day.

At the closing bell, only 36% of stocks were in positive territory, and the Magnificent Seven  (MAGS)  racked up a loss of 2.8%. Small-caps went from nicely green to a decline of 0.7% and the S&P 500 closed at the lows and fell into a gap with a drop of about 1%.

It wasn't a disaster, but it was unpleasant action, and conditions look ripe for more profit-taking. The biggest problem is that the big-cap leadership is faltering, and that hurts sentiment for buying secondary stocks even when they aren't extended or expensive.

There is still plenty of support on the charts, and it has been my contention that hungry dip buyers will be looking for entries, but they lost interest on Thursday as the bigger names faltered.

Earnings from Apple  (AAPL)  and Amazon  (AMZN)  are hitting after the close, and we'll see if they can help the mood, but it is going to take something quite significant to keep them running. The sell-the-news dynamic is very strong, and even if numbers are solid, there are market players looking for exit points into any strength.

Amazon's numbers and guidance are solid, and the stock is trading up 7% initially and hitting a new all-time high, as I write this. We will see how well it holds once the conference call is held.

There still is some good stock-picking action as we move into small-cap earnings season, but there are also some landmines if you aren't careful. Proceed with caution.

Have a good evening. I'll see you Friday.

At the time of publication, Rev Shark had no positions in any securities mentioned.