It was bound to happen. Coming into last week I said that resistance for the Nasdaq was 8950. It was going to be the first real resistance point for a major market average since the March lows.
The high for last week on the Nasdaq was 8957 and then this happened.
While I was expecting some type of reaction, with Friday falling in the standard range of expectations, the futures action this Sunday is a little more than expected. We are now pushing the envelope of the 5% maximum peak to trough drawdown on the S&P.
With that said, investors are extremely quick to jump off the bull train. Along the entire path of what I expect to be a much bigger rise than most are expecting, we will experience multiple days of downside volatility that will have investors expecting a replay of March. It won't come.
That makes opportunities like this fleeting in that they provide a tight window for investors to take stock away from the overwhelming majority of weak hands and eager bears who make up the majority of market participants presently. The pullbacks will be steep and violent, but also short-lived in nature.
With that said, a gap down opening on Monday morning is an opportunity to gain exposure, not cut and run, with large cap technology being the favorite target.
We remain long leveraged ETFs from late March and wide variety of mid to large cap tech names.
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