Small caps got drilled and helped drag the rest of the market lower on Monday. Amid a relatively quiet news day on the corporate front, the decline underscored a need for U.S. stocks to take a break after three weeks of postelection frenzied buying.
Meanwhile, Apple (AAPL) showed relative strength, as its loss of just 0.2% to 111.57 allowed the No. 1 firm in the Nasdaq in terms of market cap and revenue to hold above a recent 110.33 buy point.
The Russell 2000 slumped 1.3% on Monday, finishing nearly at session lows, after rising 10.2% during the week of Donald Trump's surprising White House victory, then adding another 2.6% and 2.4% in the prior two weeks of trading.
The S&P SmallCap 600 fell 1.2%. The S&P 500 dropped 0.5% while the Nasdaq composite and the NYSE composite both slid around 0.6%.
Volume was sharply higher on Monday vs. Friday's half-day session, according to preliminary data. So technically speaking, the Nasdaq and the S&P 500 both chalked up a distribution day.
Apple continues to be coy with its 50-day moving average, which is near 113. Watch to see if any positive news related to holiday shopping reports will help lift the megacap tech play above this key technical line.
On a positive note, Apple's Accumulation/Distribution Rating is currently a C+, according to IBD Stock Checkup. This points to a slight net accumulation over the past 13 weeks by institutional investors.
Also, the Street has recently lifted its consensus profit view for fiscal 2017 (up 9% to $9.05 a share) and fiscal 2018 (up 11%). Apple's fiscal year ends in September.
Elsewhere, small-cap IPOs were not immune from the heavy profit taking. Airgain (AIRG) slid more than 14% lower to 20 in triple average trade. The micro-cap play ($151 million market value, 4 million share float) is still up 17% past a proper IPO base buy point of 17.04.
Also in the stock market today, gold mining and select utility stocks in the diversified, electric power and water supply areas bucked the decline, gaining 1% to 4% each. Foreign telecom, retail drugstore chain and newspaper stocks also thrived.
Finisar (FNSR) also went against the grain, gapping up at the open and rising 3.7% to 33.97 in the heaviest volume in nearly four weeks. The maker of transmitters and transceivers for fiber optic telecommunications networks moved further past a 31.52 flat-base entry point and is now extended.. Investors generally should not buy a stock more than 5% past the proper entry.
Finisar got positive comments from two Wall Street equity analysts who expect a strong second quarter in the period ended Oct. 31. Finisar is slated to report results after the market close on Dec. 8. Finisar's Telecom-Fiber Optic industry group has fallen from the top spot in IBD's 197 industry group rankings yet still is squarely within the top 40.
Finisar has rallied as much as 81% from an earlier breakout in late July; that breakout began in quiet trade, but the stock held above its 50-day moving average. Volume eventually heated up in mid-August.
The biggest declines of the day belonged to cement and concrete firms, oil explorers, department store chains and biotechs. All of these industry groups dropped well more than 2.5% for the day.
On Tuesday, the market will be watching the revised report on U.S. third-quarter GDP growth. The ADP private sector jobs survey for November comes out early Wednesday.
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