Stocks reversed sharply on Wednesday to close lower, but on mixed trade. The major indices all closed in the red, as both the DJIA and the small-cap Russell 2000 shed 0.8%. Both the Nasdaq and the S&P 500 fell 0.5%, while the S&P MidCap 400 lost 0.3% on the session. Among the few sectors showing relative strength on Wednesday were gold mining, coal, wireless communications and insurance. Weaker sectors included transportation, oil services, real estate, retail and defense.
Yesterday, the S&P Select Sector Technology SPDR ETF (XLK) formed a bearish reversal candle on an increase in volume. Given this price and volume action it appears that XLK may take a rest from the recent rally. A pullback by this ETF into support of its uptrend line and 20-day EMA could provide a potential buying opportunity.
Even though bears wrestled control of the market yesterday, we avoided a distribution day on the Nasdaq. Unless we begin to see numerous distribution days over a short timeframe, we view any selling as an opportunity to purchase the strongest ETFs near support levels….(continued in full newsletter)
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