SPY is holding this support area by a thread at $122.80-123.20, ut Tech is a bit too weak to ignore. The Nasdaq ETF (QQQ) already gave back more than 50% of yesterday’s gains. This is not how new longer-term rallies behave.
The market was not able to shrug off the Oracle (ORCL) earnings and the collateral damage has been fierce. ORCL is at least holding the $25 area, but is down 13.5% on the day. A move any lower would be extremely discouraging.
The cloud computing sector has suffered tremendous collateral damage from the ORCL report. VMWare (VMW) is down 11% and Salesforce.com (CRM) is down 6% now, having bounced well off the lows at least.
IBM put a low in at $179.04 and technical damage is adding up a bit there. I got stopped out of my Google (GOOG) long around $625, and will only re-visit when it gets back above $625 for a potential breakout.
Apple (AAPL) held the 50-day and acts okay, but it's hard to believe it can make it on its own with the rest of the sector.
Much of Amazon.com's (AMZN) sky high valuation can be attributed to its heavy investment in cloud computing, and it has gotten hit today as a result of the ORCL news as well. The stock is down almost 4% today after breaking out of a tight channel.
Yesterday Baidu.com (BIDU) tried to break out of its lower pivot, but today it has given back all of those gains and more. BIDU is down 5.5%, and Sina (SINA) is down the same amount.
Oils and Agricultural stocks are still hanging around but only a tier one long if you have a thesis for 2012.
Banks are actually all hanging in OK given the greater market weakness, so I’m sticking with this Goldman Sachs (GS) mean reversion trade. I will try to add if it gets stronger into the close.
*DISCLOSURES: Scott Redler is long SPY, AAPL, GS.
