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July 8, 2014, 3:13 p.m. EDT

Speculators live by the sword, die by the sword

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About Kevin Marder

Kevin Marder is a guest columnist and a co-founder of MarketWatch. He is principal of Marder Investment Advisors Corp. and a contributor to The Gilmo Report. Previously, he served as chief market strategist for Ladenburg Thalmann Co. and developed institutional fixed-income risk management software for Capital Management Sciences.

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By Kevin Marder

Tuesday's unofficial kickoff of the second-quarter earnings season was ushered in with a round of selling Monday. The session was clearly of the risk-off variety.

Distribution was seen in a number of the leaders, including GT Advanced Technologies /zigman2/quotes/203263143/delayed GTAT +25.00% , GasLog /zigman2/quotes/204387172/composite GLOG +4.35% , Pacira Pharmaceuticals /zigman2/quotes/202929053/composite PCRX -1.69% , Repligen /zigman2/quotes/210324360/composite RGEN -3.93% , Jazz Pharmaceuticals /zigman2/quotes/202658513/composite JAZZ -2.91% , Akorn , Zillow /zigman2/quotes/204413973/composite Z -5.05% , and Tesla Motors /zigman2/quotes/203558040/composite TSLA -3.11% .

In all, however, the damage was limited in scope. When one looks at the Nasdaq Composite chart below, it is easy to picture price pulling back 3% to the horizontal line.

For a larger chart, please click here .

Chart created using TradeStation . ©TradeStation Technologies, 2001-2014. All rights reserved.

It is to be remembered that, during a market correction, leading growth titles tend to correct by a minimum of 1.5 to 2.5 times that of the S&P 500 index. More-speculative issues often decline three or more times that of the S&P. This in keeping with the age-old concept of risk and reward being positively correlated. Put another way, he who lives by the sword, dies by the sword.

Otherwise, gold proxies give back little ground in the wake of their ascent a few weeks back. What is most striking is the collection of skyscraper volume bars. The miners, such as GDX /zigman2/quotes/206399889/composite GDX -7.88% and GDXJ /zigman2/quotes/204075079/composite GDXJ -9.00% , look better technically than the metal /zigman2/quotes/200593176/composite GLD -5.37% itself.

For a larger chart, please click here .

Chart created using TradeStation . ©TradeStation Technologies, 2001-2014. All rights reserved.

For a larger chart, please click here .

Chart created using TradeStation . ©TradeStation Technologies, 2001-2014. All rights reserved.

Among the names, Emerge Energy Services is expected to record muscular earnings growth of 136% in 2014 and another 65% in 2015, per most Wall Street analysts who follow the company. Shares of the producer of sand used in hydraulic fracturing operations are ranked in the 99th percentile according to price strength over the past year. Its industry group has earned a relative-strength rank of 96.

Technically, the recent bottoming sequence appears to have placed a floor under EMES. Price gapped down 13% on June 20, with volume 698% above average. The next five sessions showed progressively lighter volume each day. In the midst of this five-day period came a wash-and-rinse day that undercut on an intraday basis the prominent swing low of two weeks' prior.

Last week then saw two major accumulation days followed by two days of lighter volume. Monday's action was a moderate plus, as the stock was a rare leader that landed in the plus column, and on higher volume than that of Thursday.

/zigman2/quotes/203263143/delayed
US : U.S.: OTC
$ 22.50
+4.50 +25.00%
Volume: 0.00
July 10, 2020 12:46p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
N/A
loading...
/zigman2/quotes/204387172/composite
US : U.S.: NYSE
$ 3.36
+0.14 +4.35%
Volume: 897,914
Aug. 11, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
5.95%
Market Cap
$306.27 million
Rev. per Employee
$3.86M
loading...
/zigman2/quotes/202929053/composite
US : U.S.: Nasdaq
$ 59.96
-1.03 -1.69%
Volume: 738,283
Aug. 11, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$2.61 billion
Rev. per Employee
$651,114
loading...
/zigman2/quotes/210324360/composite
US : U.S.: Nasdaq
$ 142.00
-5.81 -3.93%
Volume: 632,962
Aug. 11, 2020 4:00p
P/E Ratio
243.82
Dividend Yield
N/A
Market Cap
$7.76 billion
Rev. per Employee
$354,073
loading...
/zigman2/quotes/202658513/composite
US : U.S.: Nasdaq
$ 122.67
-3.68 -2.91%
Volume: 417,550
Aug. 11, 2020 4:00p
P/E Ratio
53.17
Dividend Yield
N/A
Market Cap
$7.01 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/204413973/composite
US : U.S.: Nasdaq
$ 75.33
-4.01 -5.05%
Volume: 4.10M
Aug. 11, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$18.01 billion
Rev. per Employee
$307,554
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 1,374.39
-44.18 -3.11%
Volume: 8.63M
Aug. 11, 2020 4:00p
P/E Ratio
715.27
Dividend Yield
N/A
Market Cap
$264.37 billion
Rev. per Employee
$439,627
loading...
/zigman2/quotes/206399889/composite
US : U.S.: NYSE Arca
$ 39.05
-3.34 -7.88%
Volume: 71.30M
Aug. 11, 2020 4:00p
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/zigman2/quotes/204075079/composite
US : U.S.: NYSE Arca
$ 55.19
-5.46 -9.00%
Volume: 22.14M
Aug. 11, 2020 4:00p
loading...
/zigman2/quotes/200593176/composite
US : U.S.: NYSE Arca
$ 179.94
-10.21 -5.37%
Volume: 45.35M
Aug. 11, 2020 4:00p
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