Mid-Session Market Comment 04-07-2014

U.S. market index fell this morning at the open ,  rebounded and are falling again, they are now down over 1%. For the last two weeks momentum sectors such as  Biotechnology (IBB), Internet (FDN),  social networking(SOCL) and Technology (XLK) have been have been down significantly. As a result both Nasdaq Composite and the Russell 2000 index have dropped below their 50 days and 100 day moving averages and caused a lot of technical damages. Leading stocks such as Amazon.com (AMZN), face book (FB), Twitter (TWTR) and Netflix (NFLX) , etc. have fallen more than 20% from their highs and are  technically entering bear market. They likely will continue testing bottoms. Many momentum stocks are held by hedge funds which have suffered heavy losses during the latest sell off, they will likely continue to sell shares and will be negatively impacting these stocks. Meanwhile high frequency computer stock trading is under investigation by regulatory authorities will also negatively affecting the stock market . High frequency trading is considered the driving force behind high flying momentum  stocks. Share prices may suffer without their push. The two stronger blue chip indexes, Dow and S&P 500 are already feeling the drag of the continue weakness in NASDAQ and Russell 2000. Since both the Nasdaq and Russell 2000 are dropping nearly 7% from their highs and the Dow and S&P 500 only dropping nearly 3%, the later two indexes may be playing catch up to the downside .Technically, it is likely that the Dow and S & P 500 index will at least fall to their 50 day moving averages around 16143 and 1839 respectively and there's a good chance they may not be able  to hold. Fundamentally, investors concern over weakening Chinese economy and the possible early Fed rate hike while first quarter corporate earnings worries are also not helping the market.