The market has been struggling since it hit a short-term top last Wednesday. The selling accelerated today as market players reacted poorly to Alphabet's (GOOGL) earnings. Worries about the 10-year bond yield breaking the 3% mark grabbed the headlines.
While there are some obvious negatives as interest rates rise and stocks react poorly to good earnings, the main issue the market is struggling with is a poor technical environment. The indices have lost their momentum and we have had three failed bounces now since the top in late January. The price action is not inspiring confidence in buyers.
It is important to understand that the news flow is driven more by the price action than the other way around. Interest rates mattered much more now because stocks are acting poorly and there was an inclination to sell the Alphabet earnings news because the conditions for upside were not vey good.
The good news is that the action today had the feel of a 'give up'. A number of stocks were dumped for no other reason than the fact that there were already acting poorly. Once Amazon (AMZN) rolled over and took out its 50-day simple moving average, sell stops were triggered and it was dumped because of the poor price action.
The good news is that things are now a bit oversold but the bad news is that there really isn't any good technical support. The 200-day simple moving average is lurking for the S&P 500 but it is not very strong.
We have quite a few more earnings reports coming up including Facebook (FB) tomorrow night. This market is in a 'sell the news' mode right now but it has done so much selling of news that it may actually bounce pretty soon.
As I've been discussing, this is a tough market right now and it is hard to put money to work. There were some good intraday bounces like PagSegura Digital (PAGS) which I mentioned earlier today, but this is not a market that is going to forgive your mistakes.
Have a good evening. I'll see you tomorrow.
