On Wednesday night I said that “The Bull Market Has Been Canceled” because the Big Tech stocks that had been holding up the market were starting to fail. The smaller stocks in the S&P and Russell 2000 had already broken down but that was being masked by the generals (“The Market Is About To Break”, October 3).
As you can see in the chart above, the exact opposite happened on Thursday: Big Tech got slaughtered while the rest of the market actually held up rather well (chart via @realpristinecap). In fact, Advancers to Decliners on the NYSE and NASDAQ were about 1 to 1 (3498/3621) even though the major, market cap weighted indexes were deep in the red.
The futures are up this morning on the back of Amazon’s (AMZN) 3Q earnings report Thursday afternoon. Overall revenue was +13% and AWS +12%. What the bulls really like is operating income that more than quadrupled resulting in EPS of 94 cents compared to 28 cents a year ago. AMZN shares are currently +7% in the premarket.
While we can expect a bounce at the open, whether it holds over the course of the day will be a nice tell on if there is demand for stocks at these levels. They say that the most important price of the week is Friday’s close.