Yesterday's market action was neutral.
The Nasdaq Composite plummeted 2.4% in volume slightly above average, taking the US tech index back below its 50 day moving average (Point A). Even though yesterday I'd mentioned that there was overhead resistance and that the market may pullback, I was still surprised by the significant drop because it was 'out' of character.
The S&P 600 also fell hard dropping 2.6% however trade was below average suggesting that institutional investors were reluctant to sell (Point B). The 600 does however have an area of strong support at its 200 day moving average (Point C).
India, Russia and global materials underperformed. Leading stocks action was positive. Although the percentage falling was high only a very small number fell in heavy volume signalling a reluctance to sell from institutional investors.
My short-term stance remains neutral. One sharp pullback is not enough to take away all the good the market's been doing since it bottomed June 1st. My take is that the Nasdaq may drop a little lower before it finally finds support at either 2800 or its 200 day moving average (Point D).
Please note past performance should not be used as a guide to future performance, which is not guaranteed. Investing in the Funds should be considered a long-term investment. The value of the investment can go down as well as up and there is no guarantee that you will get back the amount you originally invested.
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