Thursday, October 4, 2018

"Stocks Plunge Broadly; 2 Indicators To Watch Now"

Readers may have noticed a change in the sources we've been going to after the close the last few days. It's because the current environment has the potential to get out of hand, so more IBD and ZH, fewer cat videos.

Two articles from Investor's Business Daily.
First up the whole headline piece:
4:18 PM ET
Stocks plunged Thursday in a broad sell-off that left the Nasdaq hobbled, several top stocks below support levels and others challenging important levels.

The Nasdaq composite closed below its 50-day moving average for the first time since July 30. Back then, the dip below the line seemed minor compared with the way the composite closed Thursday.
The Nasdaq finished with a loss of 1.8%, the largest since June 25. It was down more than 2% at one point. Biotech, software, semiconductor and internet stocks — the core of the Nasdaq — were some of the weakest industry groups.

The Nasdaq 100-tracking Invesco QQQ Trust ETF (QQQ) shed 1.9% but fared a bit better by holding at its 50-day line. If support holds at that level, it would help the market halt its slide.

The S&P 500 tumbled 0.8% but closed above the 50-day line. Still, the index abruptly broke a mild upward trend. The Dow Jones industrial average lost 0.8%, with Nike (NKE), Home Depot (HD) and the Dow's technology companies at the bottom of the table.

Small caps returned to their losing ways after the Russell 2000 slid 1.4%. It's fallen this week to its lowest level since late July.

Volume rose sharply on the Nasdaq but fell on the NYSE, according to early numbers. Breadth was decisively bearish: Decliners led advancers by about 4-to-1 on the NYSE and Nasdaq.
Investor fear spiked as the put-call volume ratio climbed above 1.0. Also, the CBOE Market Volatility index, or VIX, leapt more than 20% above its 10-day moving average. Such VIX readings have signaled market lows in the past. So that's another indicator to watch in the coming days.
Leading stocks were not spared. The Innovator IBD 50 ETF (FFTY) fell 2.7% and closed below the 50-day moving average.

Several IBD 50 stocks fell below their own 50-day lines, suggesting that institutional investors are cutting their exposure to growth companies.

Palo Alto Networks (PANW), TransUnion (TRU), Epam Systems (EPAM), Grubhub (GRUB), PRA Health Sciences (PRAH), Align Technology (ALGN), ServiceNow (NOW) and Paycom (PAYC) gave up their 50-day lines.

A spike in Treasury yields caused worry among investors. The yield on the 10-year Treasury note rose as high as 3.23%, the highest since July 2011. Rate-sensitive industry groups moved sharply. Banks and other financials were the best sectors Thursday.

Automakers were the worst group, down more than 4% mainly because troubled Tesla (TSLA) skidded 4.4%.
3:45 PM ET

Tech Stocks Punished As Nasdaq Breaks Support; Leading Software Stocks Nailed
Tech stocks sold off hard in the stock market today as the Nasdaq composite pierced its 50-day moving average in heavy volume. Tesla (TSLA), Workday (WDAY) and Align Technology (ALGN) were big decliners in the Nasdaq 100. Microsoft (MSFT), Home Depot (HD) and Nike (NKE) lagged in the Dow....MORE
One bright spot—if you can call it that—is the action in the financials. The ETF representing the financial stocks in the S&P 500, the XLF was up a fraction, +0.68%, (+19 cents) at $28.1.
It's also trading up a couple pennies after-hours. The Keefe, Bruyette & Woods Bank Index, BKX, was even stronger, up 0.72%.

We'll be back to link to IBD's wrap-up when it hits.