Market in No Rush to Buy Dips Ahead of Big Tech Earnings
The action quickly turned dreary as there has been no rush into stocks despite sharp pullbacks.
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The mood was positive at the open on Monday but it only lasted about 15 minutes. There was consistent selling and dreary action. At the closing bell, breadth was abysmal with just 36% of stocks in positive territory and twice as many new 12-month lows as highs.
There was some bounce in the hard hit chips, data centers and other technology names but it faded quickly and most of the groups finished at the lows of the day. The Magnificent Seven saw a little “safe haven” action and finished with a small gain but Apple (AAPL), which has been leading lately, faded.
It didn’t help matters that the Iran situation continues to fester. Oil moved higher, bonds moved lower and sentiment was poor. The great likelihood is the Iran situation will continue to hang over us for a while.
Not Terrible
The action wasn’t terrible but there doesn’t appear to be any great desire to rush into stocks that have pulled back sharply. Only six stocks in the Nasdaq 100 (QQQ) managed gains of more than 3% and all of them are substantially down from the highs they hit in the last two months.
To a great extent this action is driven by a reluctance to make big moves in front of the mega-cap technology reports that start to hit on Wednesday. It is difficult to measure sentiment and expectations, and there is danger of a negative reaction to news about capital spending or tight profit margins. There already is talk about how companies like Alphabet (GOOGL) are dealing with bloated debt levels.
Good Charts Are Elsewhere
I don’t want to sound too gloomy. As I mentioned in my mid-day column, there are quite a few good looking charts but they are not in technology. Many traders are having a hard time breaking their addiction to technology names after enjoying some robust gains early this year, but just because you love a stock doesn’t mean it will love you back.
I remain optimistic about the opportunities that await us but patience is the name of the game.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
