It was one of those days when a snapshot of index performance did little justice to the movement in intraday trading! On the face of it, just looking at the tickers for the indexes, this is what you’d get: The NASDAQ 100 (QQQ) fell 0.78% (at its low, it had fallen far more) and the blue-chip Dow tacked on 0.38%. In reality, the big problem the indexes had to grapple with yesterday was rooted, simply put, in the large tech stocks. The FAANG stocks – FB, AAPL, GOOGL, NFLX, and AMZN, took a big hit. Heavy pressure also weighed on the chip sector after an Evercore analyst projected that Lam Research )LRCX) would see weakness in its shipments; some of the hot biotech stocks also took a turn for the worse.
At the beginning of yesterday’s trading, the small-cap Russell 2000 (IWM) set a new historic high (its 10th in the last 15 trading days), hitting the 1,679.99 point level. But then things snowballed, the index falling all the way to the 1,660.89 point level, before ending the trading day off 0.7% at the 1,667.77 level, producing an engulfing candle on the daily chart.
And here’s for an introduction to day trading. An “Engulfing Candle” is produced by the market setting a high above the previous day’s high – with a low beneath the previous day’s high. Often technical traders see in this type of candle a signal that a trend is changing. In brief, candles like this being rare, they attract a lot of attention on the part of traders.
In tandem, the S&P 500 ended lightly off by 0.1%, the NASDAQ dipping 0.5%. Yesterday’s declines only made things more interesting. And now, traders are going to spar about what we can expect next from the Russell 2000. Day trading courses are focusing now on just that!
The bears, of course, are excited, pumped with adrenaline from the “Engulfing” day. On the flipside, the bulls, will inevitably claim that there’s nothing to be excited about and that what’s really indicative is that the Russell ended the day far from the daily low. More than anything, two significant forces in this market – tech (XLK) and biotech (IBB) both ended far from the daily bottom, even though their daily performance was far from impressive. Trading live online creates an acute intuitiveness, as you follow these continually dynamic trends.
The good news, now, is that the bears didn’t succeed in creating too much negative momentum. A lot of tech stocks, after bottoming on the day, corrected towards the end of the trading day; essentially, there wasn’t a feeling that investors were fleeing for the exits.
The G7 Summit, which will take place in Canada over the weekend, is likely to cause some measure of hesitation in today’s trading. At the same time, the summit scheduled between North Korea and the U.S. for next week in Singapore comes with positive sentiment in tow.
In summary, there were a number of reasons to be defensive yesterday, but the chances are good that we’re talking about a healthy breather rather than the beginning of a negative wave, or a large sell-off. To learn more, sign up for one of our day trading online courses. Follow our stocks trading room for all updates!
Have a great trading day!
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