The markets tried to find their footing today after the S&P500 had traded in a low range of 1,345-1,360 for the last 2 days. We saw signs of a short term bottom forming because the market had managed to finish off of the lows 2 days in a row, pointing to some underlying demand in this range. After today, the market has now had 3 days to work out the balance of supply and demand. For now, it seems as though supply has abated and we wouldn’t be surprised to see some upside tomorrow.
The laggard today was the NASDAQ. The tech heavy sector was saddled by poor post earnings performances from Cisco (CSCO) and Priceline (PCLN), which fell 10% and 5%, respectively. In addition, Salesforce (CRM), which we talked about the other day because it suffered a bad technical breakdown Tuesday, absolutely got killed today. The same momentum that took CRM from $100 to $165 to start the year has taken it down 11% this week alone.
We talked about momentum shifting to the downside in names like Salesforce and we saw more evidence of that today with PCLN’s big move lower. This is definitely not a good sign for stock market bulls. However, given the markets ability to stay flat today it appears some of this waning momentum has already been priced in. The flat price action in combination with a new AAII sentiment survey that showed the % of those bullish on the market fell to its lowest since September is reason to believe supply has leveled off here.
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