Morning Report – April 7th, 2014
Friday was a brutal down day for tech stocks, and biotechnology stocks in particular. The NASDAQ comp closed at 4127.23, slightly below my short term support level which I had set at 4140. There was a bit of late day buying to lift the Comp off of its low of 4118.71, but the long black candle shows the risk trade coming off as fear took over. The Composite gapped open from its previous close on what was originally perceived as good news. In reality, it was another chance for the “Smart Money” to sell into strength.
The Composite has now established a series of lower highs and lower lows in the short term, but critical support remains at the 4000 level for the NASDAQ Composite. Volume was heavy, but I don’t believe it was climatic volume. Also, the VIX moved very little, and combined with the lack of climatic volume, I believe that the extreme fear factor that we expect at market reversals has not yet set in. Therefore, the odds are that this market is going lower until fear causes a selling panic. I can’t guarantee this scenario, but I did expect a much higher spike in the VIX and higher volume on the ugly black candle. Read Full Report