Machines Strike Again- Tech Wreck V2.1

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.

Otherwise, enjoy the column!

Subscribe to the Monster Stock Market Commentary and join the 2,513 subscribers getting it for FREE every day!

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.
^IXIC Chart

^IXIC data by YCharts


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.

Technology Stock Sell-off

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.

Nasdaq 50 day moving average

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.


We can write research like this for you, email us to get pricing details.


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.

XLK Technology

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


Sectors


Articles By Mike:

Qualcomm Is Losing Its Grip On The NXP Deal

Chevron Has Low Hurdles Going Into 2Q Results

Exxon Preview: A Lot Riding On The Results


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.