Getting caught with one's shorts down is usually an embarrassing predicament, but for stock traders, the situation can be rather gratifying. Some casual words from Google's CEO dropped the hammer on GOOG's shares today, dragging down the rest of the market for the ride. The S&P 500 and Nasdaq Composite were both down a little more than 1%, while the tech-heavy Nasdaq 100 fell 1.5%.
The aforementioned casual words came from Google's CFO who admitted, "clearly our growth rates are slowing." Most traders were probably stunned more by the admission than the revelation since Mr. Reyes wasn't really revealing anything we didn't already know. Google's stock was slapped to the tune of 7%, and was down more than 10% earlier in the day.
As always, I am more interested in the reaction to news than the news itself, and today's broad reaction to Google betrays deeper weakness in equities. For the first time in quite a while, bulls were unable to contain damage as company-specific. Other spec stocks that were hurting today include Apple, Amazon, CDW, eBay, and Yahoo. Overall, the market is looking toppy, particularly when observing the NDX. An updated chart of this index on my stock charts page illustrates the predicament.
Housing stocks were also on the swoon, falling close to 2% across the board. The GSEs, Fannie Mae and Freddie Mac, were down in commiseration. Fannie has been going straight down since last week's favorably-interpreted senatorial report. I suspected at that time that a near-term top would be in for the GSEs on that news, and I still suspect that to be true.
Despite a 1% rise in the price of gold, Newmont suffered a bit more dumping early this morning, likely done by traders using market orders to get out after yesterday's weakness. The shares are now sitting within $3 of some pretty hefty support at the $50 level, which I will be watching closely for an opportunity to add to my position.
Disclosure: Short AAPL, FRE; Long CDWC, YHOO Puts; Long NEM Calls