A Technology Led Sell-Off May Send Stocks Lower On September 3

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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September 3, 2020

STOCKS – AAPL, TSLA, SHOP, ADBE

Macro – QQQ, XLK, DOLLAR, GLD

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NASDAQ 100 (QQQ)

Stocks in the US are pulling back some today, especially in the NASDAQ 100. The Qs are down about 80 basis points, which is nothing considering how much they are up just this week. But given the size of the move in recent weeks and its location on the charts, it wouldn’t be surprising to see this turn into something more, with the first level of support around $291, then $284, and $278. A 9% drop from where we closed on Wednesday is possible, and still, keep the ETF in the uptrend. 

TECHNOLOGY ETF (XLK)

If there is one thing to consider is that the XLK has formed a bump and run pattern, and that is usually a bearish reversal pattern, and with an RSI of almost 84, a pullback to $118 seems quickly done. 

DOLLAR 

The dollar may continue to catch a bid, especially if the ECB is intent on focusing on the euro. That is terrible news for risk-assets and gold. The significant level to watch is 93.50. 

GOLD (GLD)

Watch for a break of support at $1925 on gold, sending it to $1865. Support as been strong, but the longer it test support, the more likely it is to break it. I talked about this in more detail yesterday more in the subscriber area – (Mike’s Premium content with the first 2-weeks free – Why The VIX And Dollar Are So Important – Morning)

Tesla (TSLA)

Tesla shares are trading lower today by about 6% to $420. The stock has started to come under pressure since announcing it intents to sell up to $5 billion in stock. It is a smart move, why not especially given how much the stock has run-up. The stock did break critical support yesterday at $442, and $390 is next. I did end up reducing my holdings again in the stock, back to 10%.

Apple (AAPL)

Apple is also trading down some today, but support looks pretty firm around $124. A break of $124 sends the stock lower to around $115. 

Adobe (ADB)E

Adobe has been another big winner in this technology rally and should find some strong support around $510 if a pullback develops.

Shopify (SHOP)

Keep an eye on Shopify for a potential head and shoulders pattern, with a break below $910 presenting long-term issues. 

Have a good one. 

-Mike

Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.  

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