The accruing distribution days from the past month have once again confirmed trimming exposure and overall sitting in cash until the market can regain its footing has been the right play. Today both the NASDAQ and the S&P 500 gapped at the open and never recovered. The S&P 500 broke its long term trendline, and the NASDAQ made lower lows. Both indices are below their 50 MAs.
As far as an explanation, it seems today's sell off was largely in response to Europe's bearish market outlook. ZeroHedge notes, "...broad European equity markets made nearly their largest drop in five months. With the BE500 (Europe's S&P 500 equivalent) at three-month lows and Spain's IBEX within a few points of the March 2009 lows..."
On the earnings front, Netflix (NFLX) posted after the bell and failed to impress with Q2 guidance even though it met expectations. The stock is currently trading at $84.70 in post hours trading after closing at $101.84.
The earnings event everyone is waiting for will arrive tomorrow as Apple (AAPL) posts after the bell. The stock has had a rough time the last few weeks (Bespoke, StockCharts.com) since peaking at $644. The stock closed back at its 50 MA support but looks weak here overall. We should expect a decently sized gap one way or another tomorrow after the close which will effect the market on Wednesday.
Stay frosty out there.
And here is an interesting look at a possible head and shoulder formation on the S&P 500 from Dan Zanger's Sunday newsletter. If the pattern holds true we are in for some large declines over the coming months.
Click to enlarge