Yesterday was another difficult session for the market as strength in banks and energy couldn’t offset the selling pressure. The S&P 500 and Dow began higher and it looked as if new records would be established across the board. But then it all went south.

There are several theories on why the weakness started. Once the first domino fell, the selling continued until U.S. Treasury Secretary Steve Mnuchin began speaking at the White House Press Conference.

Wall Street liked what he had to say about tax reform, and his comments sparked a 130-point mini-rally in the Dow. The index finished down 167 points, but 90 points off its low of the day.

On the other hand, the NASDAQ opened under pressure and much was made about all the big tech names dipping under their 50-day moving averages. That’s a big deal. If it persists for a week or so, it usually invites additional doubt, which then becomes downside pressure. However, I prefer to look at the exponential moving average (EMA), and I’m pleased to see that it paints a more mixed picture:

Stocks Holding EMA:

  • Facebook (FB): $149
  • Amazon (AMZN): $963

Stocks Violating EMA:

  • Netflix (NFLX): $154
  • Apple (AAPL): $147
  • Alphabet (GOOGL): $945
  • Note: NFLX and AAPL also violated their 50-day EMAs on June 9.

I expect today to be a very low-volume session as many have already taken off for an extended holiday weekend. The indices opened higher, but mid-morning swoons have become the pattern, so there’s no need to force the issue here. Plus, fundamentals buttress my opinion that this is a garden variety consolidation phase with some sector rotation — no panic. In fact, this is a time to be on the lookout for the great buying opportunities that any near-term weakness will shake out.

The stealth rebound in crude is one story that I would like to see continued next week, but the big question is when will tech make a stand? In the meantime, I’m hopeful that materials and industrials continue to rally without Wall Street fanfare.