Buy the dip (BTFD) failed for the first time in a few years. This could be an ominous sign for the equity markets in the short term.

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Technology stocks rallied today, with the NASDAQ up 1.7%. Many of the stocks in our model portfolio and watch list are up 5% or more today. So, is it time to buy?

Every time that stocks have dropped over the past few years, the profitable course of action has been to buy the dip. Is anything different this time? I can say that it feels different to me this time around and economic data has been unusually weak. The employment report was disappointing, labor force participation remains well below pre-crisis levels, GDP has been revised lower again and a host of other indicators are flashing bearish signals.

On the technical side of things, the bounce today pushed the NASDAQ above the 100-day moving average. However, the index remains below its long-term trend channel and below the downward sloping (dotted) trend line. While this is a short-term trend line, I would still like to see the index break upwards into the trend channel and through this dotted line before increasing our exposure.

nasdaq chart

It is also important to note how this is the first time that the index has fallen outside of its trend channel since this phase of the uptrend began in late 2012. You could even go back to the 2009 correction before seeing a dip of this magnitude creating so much technical damage.

So, despite the temptation to pick up shares on the bounce today, I think it is best to wait a bit longer. This could be a dead-cat bounce and I would like to see the index move back into its long-term trend channel before increasing exposure. If this rally does hold and we start another major move higher, we will still be able to capture plenty of the upside.

If this bounce is sustained and we get the technical signals mentioned above, I like KNDIINOADEP and CBIS as potential additions to the portfolio. As always, I will discuss these companies in more detail in the newsletter and trade alerts if/when we decide to buy shares.

It can be boring, but sometimes the best course of action is to wait and remain patient. I am not yet convinced that the correction in equities is over and see no point in rushing into new positions on a single-day bounce, particularly given the backdrop of worsening economic indicators.

I continue to believe that Bitcoin is offering excellent value and a good opportunity to dip your toes or add to current positions under $500. Given the volatility and unproven nature of the digital currency, you should only invest money that you can afford to lose. It is impossible to predict what moves the government might make or what weaknesses may be discovered in the technology. That being said, my bias is towards higher prices over the next year and I think Bitcoin can fill a role as a small percentage of any technology portfolio.

The April edition of the Technology Speculator newsletter will be released this Sunday.

Cheers,
Jason Hamlin
Technology Speculator