The markets opened lower, attempted to rally but that did not last long. The S&P 500 (SPX) has now experienced its worst 3-day decline since January and the Nasdaq its worst 3-day drop since 2011. Once again, tech and growth stocks took it on the chin. I know it sounds like a broken record but we are just in the midst of an adjustment process.
Evidence of Green Shoots
There was evidence of green shoots. The most overvalued stocks, which have sold off the most, biotechs and high flyers, such as Netflix (NFLX) and Facebook (FB) exhibited signs of bottoming. In fact, they all closed in the green. Unfortunately, the high flyers have taken the rest of the market along for the ride to the down side. The utility stocks cannot lead this market much longer, and they won’t.
So for now, we will keep the defense on the field but we won’t be trading away our offense for any future draft picks. We just have to let this market adjustment process run its course, which can be a frustrating process .In other words, just let this play out and stick to your guns.
Earnings Season to Begin Friday
Otherwise, there is nothing to really sink our teeth into these next two days. Earnings won’t begin in earnest till Friday and we will have some worthwhile economic data releases Thursday and Friday.
Congratulations to the Connecticut Huskies men’s basketball team on their NCAA championship. They were too much for the younger, less experienced Kentucky Wildcats. Tonight the Lady Huskies try to duplicate the effort.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.
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