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Stock Market Whiplash

Thursday was the third straight session with the NASDAQ moving by more than 1%. Unfortunately, the index has plunged two of those three times. It dropped by 1.61% on Tuesday and then recovered 1.43% on Wednesday. However, technology was under pressure again today, sending the NASDAQ lower by 1.44%...and that was after a late-day upmove. At its worst point in the session, the index was down more than 2%. It finished at 6,144.4. 

The S&P and Dow weren’t spared today’s drubbing. Both of the indices had their worst single-day decline of the month. The S&P was off by 0.86% to 2419.7 and the Dow dropped by 0.78% to 21,287. 

“So why were we down so much today? There wasn’t much in the way of a material event that would drive the sellers to take action today. Instead, this looks a lot more like end of quarter profit taking and lightening the load on some of the stocks that have run a lot in the quarter (see TSLA),” said Brian Bolan, who is editor of Stocks Under $10 and is also filling in for Steve at RTA today. 

The only buy in the portfolios on Thursday came from Zacks Counterstrike, which added a position to capitalize on the biotech breakout while also selling two other names for profits. Learn more about these moves in the highlights section below, along with some other analysis from the editors. 

Today's Portfolio Highlights: 

Zacks Counterstrike: With yet another sharp pullback in the NASDAQ, Jeremy has an opportunity to participate in the biotech breakout at a good price. On Thursday, he bought a 7% allocation in Direxion Daily S&P Biotech Bull 3X ETF (LABU), which had been spiking higher and likely will again. Meanwhile, the editor also sold Caterpillar (CAT) and a quarter of Craft Brew Alliance (BREW) for gains of 6.9% and 6%, respectively. The full commentary has more on today’s action. 

TAZR Trader: "Well that was some fun rotation on Thursday. But sell Tech to buy Banks? Of course it makes some sense to rotate money from this year’s outperformer to the underperformer.  

"But since today is quarter end, my sense is that fund managers would rather “dress the windows” with the quarter’s winners, especially if they are on sale. More importantly, we want to think about what they will do headed into earnings season.

"To do that, we simply think about why Tech has led and if anything has changed. The answers are “Earnings” and “No.” This sell-off is a perfect time to get better exposure to your favorite earnings power-houses on the innovation frontier.

"And the charts say the turn is close at hand. Starting with the S&P 500, good support will be found around 2,400. As for the Nasdaq Composite, big buyers should surface near the May lows at 6,000 and the April 24 gap from 5,920." -- Kevin Cook 

Momentum Trader: "While we may be overweighting our NASDAQ coverage lately, it’s for good reason. It’s been the main focus of the market over the last couple of weeks. Today the NASDAQ Composite retested the lows and breached them. However, there’s still a silver lining here. Even though intraday the NASDAQ breached the lows, it didn’t stay down there. In fact, it closed several points off the lows and, more importantly, above 6,107.

"The index is spot on the 50-day moving average right now. The last time it got this close was mid-April. Then it caught a healthy bid and rallied up to new highs. I’m sure sometime overnight or tomorrow morning they’ll try to jam it down again. If it finds a bid, watch out for a rip-your-face-off rally. If it fails, then the next stop is the May swing low just under 6,000." -- Dave Bartosiak

All the Best,
Jim Giaquinto

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