This selling was led by the NQ8 and NQ100,
but took place with all the tech stocks.
Small caps were also down.
More traditional sectors such as XLI followed the negative trend.
Note below that financials outperformed, indicating the the market expects the Fed to raise rates this December.
Index investors continued selling the QQQ, but SPY and IWM still look ok here.
The general negativity for equities still comes from the buying of US Treasuries and the Yen (liquidity buys safe assets and Yen carry trade is reversed.)
Conclusions:
How do we trade the coming weeks?
We have two events: the Fed's rates decision and the Santa Claus rally. Both are still further down the road. For now, we have to see whether the tech selling propagates to the rest of the market. If it does, I believe that markets will bounce hard because funds need to protect their 2017 gains.
I believe that professional investors will want to test the resolve of index/algos investors. This can only be done on lower prices since higher prices did not attract buyers.
