Some Perspective After Today’s Sell-Off

It was a week of record highs and record breaking declines.  The Nasdaq rallied to a new record high while Facebook's $120 billion plunge in market cap set a new mark for losses in one day.

Today $TWTR took off where $FB left off, plunging some 20% after their earnings report failed to meet expectations.  Clearly the concern is which tech stock is next to plunge? Even  $AMZN saw an initial $100 post earnings plunge before rallying to record highs.

Tech took it on the chin today with the $QQQ closing down over 1.3%.

Momentum, which was a great buy signal on the recent move to positive, is on the cusp of a negative turn for $QQQ.  That would be a bearish development over the short term.

$IWM had another sharp sell off, this was just a session after almost hitting new record highs.  Trendline support going back to 2008 remains the line in the sand short term with the $165 price the level that needs to hold.

Long term chart:

Short term $IWM chart:

The S&P500 and Dow Jones Industrials actually had a decent week and still look modestly bullish.   Financials also remain a bright spot with $JPM closing up 1% today and at session highs.

$DIA is at a key juncture heading into next week, with still a lot of upside left before it makes new record highs.

The $SPY meanwhile, came within percentage points of January's record highs before pulling back.

$XLF continues to breakout.  The set-up is there for a move back over $30, especially if some of the names that have been lagging pick up the slack.

and TLT remains ripe for a move lower.

Finally the VIX again could not break and hold under 12.  It continues to skirt around 12 before rejecting it.  Today was no different.

Clearly this weeks earnings reactions spooked investors enough to sell into the weekend.

Next week is another huge week of earnings.  We also had the FOMC and the Jobs Report!   It's going to be one of the biggest weeks of the summer.

I remain bullish on this market overall, and think $SPY $290 $QQQ $190  and $IWM $180 are likely in the cards into fall.   However a  negative momentum trigger early next week will probably see me shift my bias short term  towards downside into August.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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