Nasdaq Leads Stock Market Sell-Off On 3 Warning Signs

A promising rally was quickly fading Friday as the Nasdaq composite led a broad stock market sell-off.




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The technology-heavy Nasdaq plunged 2.4% in late afternoon trading as multiple software industry groups, internet companies and biotechs fell sharply.

The S&P 500 lost 1.1% but held above the 200-day moving average. The Dow Jones industrial average fell 0.9% and was trying to hold above the 50-day line. Small caps were routed as well, with the Russell 2000 down a steep 2.4%.

Volume was tracking higher on the NYSE and lower on the Nasdaq compared with the same time Thursday. Losers led winners by more than 13 to 5 on the NYSE and by nearly 4 to 1 on the Nasdaq.

Friday’s sell-off cost the Nasdaq composite all gains from Wednesday, when the market made a bullish follow-through.

That was one bad sign. Another was that the Nasdaq went back down below the 200-day moving average. A third bad sign was the higher volume on the NYSE, which indicated that institutional investors sold heavily.

Disney Trims Gains

On the Dow, Walt Disney (DIS) was up nearly 2% after paring much of a 3.6% advance that greeted the company’s earnings report Thursday evening. The entertainment company beat profit and sales expectations. 

II-VI (IIVI) shares plunged 18% in big volume after the company agreed to acquire Finisar (FNSR) in a deal valued at $3.2 billion that combines two suppliers of 3D sensors. Finisar shares rallied 15%, touching the highest level this year.

Take-Two Interactive (TTWO) fell below its 200-day moving average after the company’s current-quarter outlook disappointed. Other video game publishers are selling off on weak holiday-season forecasts. Activision (ATVI) tumbled 13% to the lowest level since May 2017.

Tableau Software (DATA) fell back below the 118.18 buy point of a cup base, just two days after the stock broke out past that entry in big volume. Shares broke out Wednesday on a mixed earnings report.

The price of crude oil was on track for a 10th consecutive drop. U.S. oil prices have fallen more than 20%, what is normally considered a bear market.

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