The NASDAQ Composite Index blew through its 50-day moving average on Thursday on heavy selling volume to cap off a three-day decline that began on Tuesday. That’s when President Trump uttered his now famous “fire and fury” threat to North Korea’s belligerent and bellicose leader. Thursday’s sell-off was attributed to additional comments by the President that day when he stated that perhaps his original threat wasn’t “tough enough.”
In this manner, Wednesday’s undercut & rally attempt after the NASDAQ dipped below the prior lows of late July and early August failed immediately. That was accompanied by similar failures in individual stocks that were also attempting to post undercut & rally maneuvers Wednesday, such as Netflix (NFLX) and Amazon.com (AMZN).
The pundits and talking heads have attributed this week’s selling entirely to the rhetoric steaming back and forth between NoKo and the U.S. However, we should keep in mind that the current selling is also something of a downside follow-through to the ugly big-volume somersault and reversal off the peak that we saw the NASDAQ perform near the end of July.
Looking at the chart below, without any knowledge of the news that allegedly caused it, the NASDAQ Composite looks to be in a bearish state. Only a quick recovery back above the 50-day moving average would help to right the situation, and of course in this market that is always an outside possibility. But for now, things appear a bit unstable, at best, if not outright bearish.