Monday, May 12, 2014

Internet Group Crashes

After losing more than 10% over the last four trading days, the Nasdaq Internet Index is now down 21% from its high in early March.  We wouldn't argue with anyone that wants to call this a crash in the group given the magnitude of the decline over such a short period of time.
Below is a look at our trading range screen for the 30 largest stocks in the Nasdaq Internet Index.  For each stock, the dot represents where it is currently trading in its range, while the tail represents where it was one week ago.  Moves into the green shading are considered oversold.
As you can see, big stocks like Netflix (NFLX), Pandora (P), YY Inc (YY), Yandex (YNDX) and Zillow (Z) are down 15-25% over the last four trading days alone. (AMZN) is down 11.63% over the last four days, and it's now down 27% year to date.  Keep in mind that most of these companies recently reported better than expected numbers, and we have still seen wholesale liquidation of them.  Longer term, these names are in steep downtrends, which means the path of least resistance remains down.  That being said, they have gotten to extreme oversold levels in the near term, and like we saw earlier this month, they can certainly experience short-term bounces within longer-term downtrends.

No comments:

Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.