Outflows from PowerShares QQQ Trust Series 1, which tracks the Nasdaq 100 Index topped $3.7 billion for the five sessions ending July 28, the most since early November 2007. On Thursday [..] QQQ suffered an intraday selloff of more than 2 percent led by Amazon.com Inc., with investors dumping the e-commerce giant ahead of its quarterly earnings report. Also that afternoon, JPMorgan Chase & Co. quant Marko Kolanovic warned that investors had a “limited window” to position for a pickup in volatility.
In my humble view the markets are probably due for significantly more selling. Everything is expensive, hitting all time highs without much of a pullback between rallies. Most investment managers are bullish stocks, and margin debt (to borrow and buy stocks) is at record levels. Earnings expanded more due to buybacks of shares than actual sales improvement. As a result of this, and more, I think we’re due for a breather, if not an outright correction. But I could always be 100% wrong.
Full disclosure: Short NASDAQ 100.