Stocks tumbled again Monday, with tech companies getting hit particularly hard.

The Dow Jones industrial average and the S&P 500 were lower at midday. Strong earnings from Dow component Caterpillar (CAT, Fortune 500) helped to keep the broader market’s losses at a minimum. Shares were up 4% after the construction equipment company easily blew past earnings and sales estimates, and approved a new $10 billion stock buyback program.

But the Nasdaq was down more than 1% andCNNMoney’s Tech 30 index also fell. Shares ofTwitter (TWTR) plunged. Fellow social media companies Facebook (FB, Fortune 500) andLinkedIn (LNKD) also were markedly lower, as was online streaming giant Netflix (NFLX).

The Nasdaq was also dragged lower by biotechnology companies such as Celgene (CELG, Fortune 500)and Alexion Pharmaceuticals (ALXN). The PowerShares QQQ Trust (QQQ), a widely-held exchange-traded fund that tracks the Nasdaq 100, is now down more than 2% for the year. And some are worried that the ETF will fall even further.

“$QQQ is teetering on the edge. We may see a sizable correction begin to unfold,” said StockTwits user OptionsElite.

….read more HERE

The rout in the US share market has many talking heads patting themselves on the back. But this is by no means a major high. The Cash SP500 had finally broken out above the Breakout Channel. It is typical to come back and retest it before advancing. The cash closed at 179029 and the channel top resides at 179012. We have NOT elected any Weekly Bearish Reversals as of yet and our first one lies at 176040. A weekly closing beneath that level should cause a move into the mid-point of the channel in the 16800 zone. We still see the weeks of Feb 10th and 24th as the nearby targets for turning points.

As we have warned, a near-term correction was due with the first opportunity for a low in February. January did just barely exceed the December high intraday, but not on a closing basis on the Dow and SP500, This raises some concern technically. Exceeding the December high even by a fraction intraday warns we do have a serious outside-reversal to the downside potential if the SP500 closes below 176799 at month end 15665.08 on the Dow. This would warn that a sharp drop is likely into February where we could see a retest of the 1680.00 level on the Cash SP500 15365.00 on the Dow.

The same construction of the Breakout Channel on the Dow Jones Industrials gives a different perspective. Here the market has still not broken out. It remains contained within the channel and this illustrates the difference between the HOT MONEY and the BIG MONEY. The Dow is still the leader to watch. Here, the turning point is the next week so caution is required. Again, no Weekly Bearish Reversals have been elected, but a weekly closing BELOW the December low will warn of a technical sell-off ahead.

Read more from Martin: The Emerging Market Crisis

The media scrambled last week to assign a “reason” as to why the market sold off.  For the majority of market commentators, who do very little solid research or analysis, the selloff was due to the emerging market rout and currency swoon. This was not the “cause” but rather the “effect” of a “de-risking” short squeeze in the bond market and currency markets. 

I have been writing in this missive for the last several months that emerging markets were not the “nirvana” of the next great market cycle due to the ongoing economic drag that faces these countries.  I have also been consistently recommending that investors eliminate all holdings in emerging markets as well. That advice has consistently fallen on deaf ears.

The recent import data tells you all you need to know about the status of emerging market countries that are dependent upon our consumption for their livelihood.

….read the 16 page report HERE