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Notice anything Bizarre today in the technology sector? Around 12:30 the NASDAQ Composite sold-off in nearly a straight line by almost 2 percent from its highs. It took about one hour to go from peak to trough. That is all the time it takes to the move the market these days. If you think this is Deja-Vu or a repeated post from late June, I’m here to tell you it is not, something similar happened on June 9 and June 27, and again today, July 27.
Watch The Latest Reading The Market Premium Video – Tech Wreck 2.0 Explained: The Revenge Of The Machines
12:30 – Technology Bloodbath
The crazy thing about this sell-off is how eerily similar it felt to the two previous sell-offs. The damage was in technology stocks such as Microsoft (MSFT), Tesla (TSLA), Alphabet (GOOGL), the Biotech ETF (IBB), and the technology ETF (XLK). But the damage in the broader S&P 500 and Consumer Disc (XLY) was not nearly as impacted.
The market moved as if it were in a vacuum with all the bids just melting away.
NASDAQ Trend
It is evident the market is using the 50-day moving average as a support level. While it is also apparent that the Nasdaq is following a trend line, that has been drawn on the chart below, as resistance. When the index gets too far above that trend, we see a sell-program come and drive the composite lower. The moves are profound and swift, with the trend going back to September of 2016.
Machines
There is something taking place in the market where some institution is coming in with a large sell program concentrated on the riskier and higher Volatility parts of the market. It seems it is being put to work with a sloppy get it done by the end of the day instruction. This is causing other participation, and VWAP “dumb” algo’s in the market to play catch-up and putting further pressure on the stocks.
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ETF Effect
Then there is the ETF effect, simply put, if an ETF goes down, then the stocks within the ETF start getting driven lower. Notice only 5 of the top 25 stocks in the ETF were up, and they were due to strong earnings results, with the expectation of ADP, which was up on news Pershing Square was building a stake.
This is the world we live in today, where one big sell program can set things into motion and with the modern technology of Algo’s and ETF’s the markets can get moving directionally very fast.
Sectors
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Disclaimer
Michael Kramer and the Clients of Mott Capital owns shares of TSLA, GOOGL, and NXPI
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 recommendation made during the past twelve months. Past performance is not indicative of future performance.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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