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A Group of Leading Stocks Fall in Fast Trade

Just when the market signals strength the rug gets yanked out from underneath leading stocks

An earnings pre announcement form EQIX stock took down an entire technology sector.  Big market leaders were taken to the woodshed as investors fled cloud computing stocks in heavy turnover.  The NASDAQ was hit hard by the cloud computing stocks while the S&P 500 and Dow Jones Industrial average held up relatively well.  A rotation out of technology stocks appears to be underway, but with leading stocks taking a big hit it begs the question whether or not a more than minor pullback is underway.

 

Natural resource stocks have been cropping up as of late and with commodity prices on the rise it is not surprising we are beginning to see these stocks moving higher.  Normally, we don’t pay attention to the “why,” but it is clear the continued injection of liquidity into the market.  With excess liquidity floating around in the market commodities will rise.  The rise in commodities does remind me of the rise in commodities in April of 2008.  History has shown when commodity stocks lead the market the uptrend in place has a high probability of failing.

Our uptrend was in good shape until today when more than a handful of leaders folding in on themselves.  Many of these leaders have been performing quite well since last year, but the massive selling occurred was quite disappointing.  Heavy volume selling, especially through major moving averages is a big warning signal a stock may have further to drop.  Do not hesitate to sell your stock and move on.  DO NOT hang around to “HOPE” the stock will come back.  Hope is the most dangerous emotion in trading; do not get caught up in hope.

If we recover here will be quite an achievement after today.  Even as the market’s consolidated Tuesday’s gains relatively well, but the underlying action in the leading stocks was not exciting.  The market is now eying the jobs report and with the private payroll numbers well below expectations does not spell R-A-L-L-Y!  Cut your losses and pay attention to your stocks.  The ones we are watching are spelling trouble ahead.