The technology sector is surging higher today. The NASDAQ is trading at 4,111.75, + 32.00 (0.78%). Yesterday, CNBC and other financial websites were spreading doom and gloom about the tech sector. This was just one of the signals that told me there was a bounce coming. Anytime doom and gloom or massive greed show themselves, the markets go in the opposite direction. This is the classic contrarian signal that works better than any technical signal out there.
Brushing aside the contrarian signal, any technician of the charts could see that many NASDAQ stocks like Facebook Inc (NASDAQ:FB), LinkedIn Corp (NYSE:LNKD), Pandora Media Inc (NYSE:P) and Netflix, Inc. (NASDAQ:NFLX) were down over 20% each (in bear market territory) and into major support. Take a look at NetFlix. The stock was down from $458 per share to near $330 per share in just over a month. In addition, it filled a major gap and slammed into the 200 moving average. A blind man could have seen this bounce coming a mile away. Today, Netflix is trading up close to 4% on the day.
All these tech stocks showed signs of exhaustion and were into major technical levels. While the bounce may be short lived, it is none-the-less an opportunity to profit. Pandora was purchased yesterday at $25.95, one day later (today) we sold it for a 10% gain. If you can see the levels and understand the charts you can make millions.
My expectations are for a multi day bounce leading to more heaving selling. The next round of selling will take the Dow and S&P stocks with the tech stocks.