Frightening Friday As Stocks Tank On October 30
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Frightening Friday As Stocks Tank On October 30

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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October 30, 2020

Stocks – SQ, AMD, NFLX

Macro – SPY

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It was a pretty brutal day. If not for a last-minute surge, the indexes would have been down at least by another 1%. Still, the S&P 500 finished the day lower by 1.2%, while the NASDAQ 100 QQQ finished lower by 2.5%. More surprising was that yields were higher, rising to 87 bps on the 10-year, while the dollar index was basically flat.

S&P 500 (SPY)

We came very close to testing the confirmation zone for the double top pattern on the S&P 500. But we managed to avoid it. It was strange because I think more than anything, with earnings over, all those short-term call options that were out of the money basically collapsed, and that left dealers to unwind their hedges. That certainly didn’t help the matter.

Additionally, there appeared to be a broad derisking taking place in the market, as evidenced by yields rising, the dollar going sideways, and the S&P 500 dropping. There is a possibility we trade lower from here, to perhaps the 2,800 to 2,900 range on the S&P 500.

Netflix (NFLX)

Also, we saw a steep decline in Netflix, which was surprising given it rose sharply yesterday when it announced it would raise subscription prices. Still, the stock gave it all back today. That $475 region is like a rock; the falling RSI suggests it goes lower, but to this point, no such luck.

Square (SQ)

Square got hit hard because Twitter got rocked. I really don’t buy that. But anyway, the stock broke its long-term uptrend, and I see that as a big negative. This stock could have a long way to drop should things get worse—a long way.

AMD (AMD)

AMD’s moment of truth likely comes next week, with the stock going out sitting on support at $75.

Back tomorrow with a special edition

-Mike

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