Nasty Reversal In Techland

The tech market has a nasty reversal today. The chart above of the Nasdaq shows what is called a negative reversal. The market was higher early, and then reversed negative into the close.

What is more, volume really picked up today. So this makes for a distribution day as well. The selloffs were particularly nasty in the big tech stocks that have led recently. Check out the charts of AAPL, GOOG, RIMM, BIDU, etc. to see what I am talking about.

A big brokerage firm downgraded BIDU midday, and that started the profit taking. Then the ECB came out and said that the European central bank may need to raise rates more and become more restrictive.

This exacerbated the selling, given that we have been deeply overbought, and everyone rushed to take profits at once. The volatility indexes spiked higher, but the put/call ratios were fairly subdued, as was the ARMS Index.

This means that complacency has worked its way into the market for the time being, and todays action could mark a short-term top. I still think we finish the year higher, but we need to have a little overdue digestion period first.

How long will it last? Hey, now, let's just take it one day at a time and see how the landscape unfolds first.

Have a good night. And if you didn't take any profits today, think about raising a little cash in the morning.

long AAPL, GOOG, RIMM