NASDAQ Pause Day Or All Out Weakness?
This afternoon, the highly followed NASDAQ Composite is trading slightly lower on the session. This decline in the tech heavy NASDAQ comes as the Dow Jones Industrial Average and the S&P 500 Index are trading higher. It is important for traders to remember that the NASDAQ Composite traded higher by 80.0 points yesterday, therefore, today's small pullback is very common after such a large price move. Often, the major stock indexes will consolidate or pause before moving higher again.
The problem with the NASDAQ Composite and the other major stock indexes is that price is trading below all of the major daily chart moving averages. When the price of a stock or index trades below the major moving averages it tells traders that the market is in a weak technical position and susceptible to lower prices. Many traders and investors believe that yesterday's rally was just a technical bounce from an oversold condition. While this might be true the markets were all very strong into the close and that type of action should be respected in the short term.
Some leading NASDAQ stocks that are struggling today include Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Sandisk Corp (NASDAQ:SNDK), and Citrix Systems Inc (NASDAQ:CTXS). All of these stocks had surged higher yesterday, therefore, today's pullback could be due to some quick profit taking from yesterday's large point advance. All traders must still be extremely careful in this market as the volatility is likely to remain higher for the foreseeable future.