Nasdaq Closes Below Support To Signal Correction

Yesterday big cap technology stocks and fad plays that make up such things like the ARKK ETF fell apart on big selling. However, the DOW managed to close in the green even though the Nasdaq dropped over 200 points. This suggests that we are starting a correction in the markets that is likely to play out in a similar manner to the one that happened in February and March did. That one was led to the downside by big cap tech plays while the S&P 500 didn’t even fall 5% and thing such as REIT’s and energy stocks managed to go up. Yesterday the XLE ETF was up and various commodity ETF’s also finished the day green.

So, look for market weakness to be mainly in the Nasdaq for the next several weeks, if not longer.

There is nothing shocking about this drop over the past two days in the Nasdaq at all. I talked about the $13750 level as a key support level over a week ago. My target is for a pullback to likely end in the area of the 200-day moving average and the March low. On CNBC Cramer said people should buy and today the market is gapping up so no one is worried at the moment.

But again, weakness is focused on fad plays as you can see from the ARKK ETF, which specializes in them.

ARKK became a “must own” ETF hyped up everywhere in the last quarter of last year, even on CNBC, as it did so well to the upside as “momentum monster.” Some circles still talk like it is a great buy, but you won’t hear me say that. The same thing goes for the crypto currency complex. Bitcoin dumped yesterday along with the Nasdaq, to show us once again that it DOES NOT serve as a safe haven, but only as an instrument of speculation.

People are not buying crypto currencies as real investments or to protect their assets, but as a way to get rich quick.

If you doubt it – ask why is anyone buying these top market cap coins?

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