Dip Buyers Jump In to Defy the Bears and I Joined Them in Buying Nvidia
The question now is whether this was just a hiccup or the start of a deeper pullback.
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Many market participants have been looking for an excuse to take some profits, and the news of the bombing of Israel by Iran provided a good excuse. Stocks sold off sharply on the news but bounced back nicely after it was clear that no significant damage or loss of life occurred.
Dip-buyers have been consistently rewarded when they jump in quickly on weakness, so they are well-trained to go to work just when the bears are hoping to generate some momentum.
Although stocks did come back, they still closed well off the highs at the open. The Nasdaq 100 QQQ and Russell 2000 IWM lagged with losses of around 1.3%. That drove negative breadth of about 2,800 gainers to 6,650 losers. Apple AAPL and Nvidia NVDA were deep red and drove much of the decline.
I used the weakness in Nvidia to make a partial buy around the 50-day simple moving average. I’ll be looking to add as the chart develops further.
The question now is whether this was just a hiccup or the start of a deeper pullback. There is some employment data later this week that will have an impact, but there will also be plenty of speculation about retaliation in the Middle East.
Technically, it would be very healthy if we had a pullback now and reduced expectations going into earnings season The banks will be the first to report, with JPMorgan Chase JPM kicking things off on October 11.
Volatility picked up, which is a good sign for traders looking for more action, but we really need less compliance to shake things up.
Have a good evening. I’ll see you in the morning.
At the time of publication, Rev Shark had no positions in any securities mentioned.
