The market has been drifting around in rather harmless fashion for a few days, but market players are becoming worried about the lack of energy and were a bit nervous about earnings tonight from Netflix (NFLX) and IBM (IBM) . That produced a high level of selling pressure with the indexes closing at the lows of the day for the first time since June. It was still quite mild, but there was some technical damage done.
The response to Netflix earnings after the close is not going to help. The stock is down sharply on disappointing subscriber growth. NFLX has been a feast-or-famine stock on earnings and Wednesday it is the famine that is in play.
On the other hand, IBM (IBM) is trading up about 2.5% on its numbers, which are slightly ahead. The company reaffirmed guidance as well, which looks like enough to give the stock a boost.
The SPDR S&P 500 exchange-traded fund trust (SPY) continues to drop after the close, probably as a consequence of worries that Netflix may be an example of what is to come. A weak quarter for the overall market has been well anticipated, but it hasn't had much impact due to optimism about a dovish Fed.
Now that the numbers are actually hitting, it is more difficult to place a lot of faith in lower interest rates as a sufficient offset for poor growth.
The S&P 500 rolled over Wednesday, and had its lowest close since July 10. It doesn't have much support, but it is still in a trading range. There is some additional concern with the action today, and it is important to tighten up stops on stocks, but it isn't sufficient to shift the overall market into a downtrend.
This market has required a very selective approach if you want to make money. The hot group today was precious metals, which isn't a good leadership group in a bull market. But trading opportunities are around, if you manage positions tightly.
Have a good evening. I'll see you tomorrow.