Stocks Plunge On September 3, As The Flood Gates Open
Stocks plunged on September 3 as the dam finally breaks, unleashing the wrath of the gamma unwind.

Stocks Plunge On September 3, As The Flood Gates Open

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


Macro – QQQ, SPY

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That wasn’t fun. The S&P 500 fell by 3.5% today, and the NASDAQ 100 Qs fell by over 5%. It always amazes me how much faster markets can fall then they can rise. No matter how long I have done this, which is a long time, it still amazes me. Today’s price action took six days of gains away from the market.

I’m sure the big question on everyone’s mind is what happens next. It depends. The chart of the S&P 500 looks pretty bad to honest. Today’s action left the index sitting right on its uptrend from early April. It is too close to say it is officially broken, but it is not a spot you want to be. There is a chance this could turn into that pullback I have feared might happened, dragging us back to that 2,860 level. That’s how vital this uptrend is. (Mike’s premium content – A Drop To 2860 On The S&P 500 Is A Real Possibility – if you hate it cancel it, I’m not gonna chase you down.)

The good news is that the Qs have not yet come close to their uptrend.

At this point, all I can say, we have to wait and see. We can’t say that the market is breaking down yet, but at the same time, we don’t know if this is a one day wonder. Given how overbought this market was, I doubt this is over, and I think there is still further to fall.

The NASDAQ 100 VIX, the VXN, closed above 40, which is certainly not good.

The put to call ratio did rise today, on sightly higher put activity and slightly lower call activity. But an amount that makes me think the mentality of the options market has not changed in a meaningful way.

Apple (AAPL)

Apple fell below support today at $124 and is likely not finished falling, with the next level of support at $115.

Nvidia (NVDA)

Nvidia fell to support around $511 today, with a drop below that support sending the shares lower to $463.

Square (SQ)

Square broke one uptrend today, with the next uptrend around $140.

Tesla (TSLA)

Tesla has a pretty significant level of support, around $380 to $390. That is a considerable level that needs to hold, with the potential for shares to drop to $330 otherwise.

Have a good one!


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