The S&P was able to stage a small Red Dog Reversal in today’s session, but the price action was far from convincing. The index saw some early selling but was able to get back into positive territory. However, it was unable to extend from there, finishing with a marginal 0.05% gain. Tech as a whole continued to show relative weakness, although there were a few Red Dog Reversal in select stocks that could lead to positive divergence from the group. The Nasdaq finished down 0.44%.
After a day of carnage like we saw in tech yesterday, you do your best in the subsequent sessions to separate the baby and the bathwater. How do you do that? By using retracement rules and the Red Dog Reversal tactic.
Apple (AAPL) was one of the most impressive stocks in tech today as it bounce 1.17% to erase most of yesterday’s losses. The stock is coming near the apex to the recent wedge pattern, so a more swing-type move in either direction could be imminent. Google (GOOG) wasn’t as impressive, but still finished negative to show positive divergence from the Nasdaq Composite. Sina (SINA) separated itself from the pack in the Chinese Internets group with an impressive reversal and 3.28% gain on the day. Sandisk (SNDK), a recent highlight on Off the Charts, posted gains of 0.52% and continues to hold above its 21-day MA.
On the flipside, prominent names like Amazon (AMZN), Netflix (NFLX) and Tesla (TSLA), among others, continued lower. All closed off their lows to varying degrees, but it feels like the air could continue to seep out of these high-valuation names.
Biotech stocks also continued to get sold hard as IBB finished down another 2.1%.
The flight to safety continued in the early part of today’s session as Utilities (XLU) were strong out of the gate, but the ETF put in a large topping tail that reinforces the notion that this is just a short-term bounce.
Continue to take a defense-first short-term approach amid all of the headline risk regarding the debt ceiling.
Disclosure: No relevant positions