A buy program bailed out the market just as it was testing the lows of the day in the final hour or trading. That orchestrated buying pushed the market back up near the intraday highs and took some of the sting out of the action, but there was still far more red on the screens today than has been typical.
Once again, a few big-cap names, including Google (GOOG), Priceline (PCLN), Baidu (BIDU) and Intuitive Surgical (ISRG), helped the Nasdaq and Nasdaq-100 outperform. Biotechnology was the strongest sector, but overall breadth was weak with just 1500 gainers to nearly 4000 decliners.
Typically, weakness like we saw today has not lasted long. There was only one occasion, in early, March, when a weak day like today was followed by a gap down the next day. Within four days, we had completely recouped the losses -- but that was the closest we have come to any real selling so far this year.
While the action was rather dreary today (and I made some defensive moves), there is still no clear indication that a major top is forming. It was just some routine pullbacks and consolidation in a market badly in need of profit-taking. This could easily be the start of something more onerous and we should be careful, but becoming too bearish too fast has been a mistake too often.
A little increased caution is warranted, but don't be overly bearish given this market's recent inclinations. If we stay selective and use good money management discipline, we should be able to navigate through this.
Have a good evening. I'll see you tomorrow.
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