As we have mentioned the past week or so, NASDAQ has been the weaker index of late after leading early in 2014, and that continued today. Some of it was due to specific news events and continued weakness in biotech- the S&P 500 fell 0.49% and the NASDAQ 1.18%. A lot of typical momentum names were hurt today. Earlier in the day China reported another weak report; its “flash” (initial) purchasing managers index remained below 50, which is a level indicating expansion.
The NASDAQ fell below the 50 day moving average intraday before dip buyers showed up; in the end it closed right at that level. The S&P 500 continues to act better. Note how the S&P 500 fell exactly to the support line we have in purple for the second time in a week.
Netflix (NFLX) took the brunt of the damage today as it was reported in the Wall Street Journal that Apple (AAPL) held discussions with cable-operator Comcast for a deal for a streaming-TV service.
Meanwhile, Apple investors liked the news.
Weakness spread to other names such as Facebook (FB), Twitter (TWTR) and LinkedIn (LNKD).
Last week’s weakness in biotech continued.
A good article here last week from Mark Hulbert on a heavy exodus of stocks by corporate insiders. It uses a specific measure that strictly defines “insiders” from a much broader definition that is often used, and it is showing extreme readings.
Currently that adjusted figure shows a record level of insider bearishness. According to this measure, corporate officers and directors in recent weeks have sold an average of six shares of their company’s stock for every one that they bought. That is more than double the average adjusted ratio since 1990, which is when Seyhun’s data begin. One year ago, Seyhun’s adjusted ratio was solidly in the bullish zone, he says. And in late 2003, the ratio was more bullish still. The current message of the insider data “is as pessimistic as I’ve ever seen over the last 25 years,” he says.