Stocks Slump On January 11 As Risk Turns Off

Stocks Slump On January 11 As Risk Turns Off

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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Stocks – TSLA, AMZN, SQ, FB

Macro – SPY, TLT, BTC

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Stocks fell on Monday as risk-off was the focus for the day, with the S&P 500 falling by around 65 bps to close at roughly 3,800. Meanwhile, the NASDAQ 100 QQQ fell by around 1.3% on the day.

Bitcoin (BTC)

The move lower came as yields continued to push higher, and the dollar index rose—this lead to a move lower in Bitcoin and risk assets like copper. The move lower in Bitcoin should not surprise anyone, given how much it has run in recent weeks. The crypto had hit a high of about 41,000 on January 8; it touched a low around 30,000 today, a sharp decline.

Bitcoin, if anything, represents an element of the risk sentiment of the market. Risk has, at least for now, turned off.

South Korea (EWY)

It wasn’t only Bitcoin that fell sharply. Overnight the South Korean Kospi, which has been one of the hottest indexes anywhere in the world, had a massive intraday reversal. The index had been up nearly 3.5%, only to give back all of those gains and finish the day down. The index has climbed by more than 40% just since November 1.

S&P 500 (SPY)

For now, the S&P 500 has maintained its trend by holding on to support above 3,790. A break of support likely sends it lower to the bottom trend line near 3,700.

US 10-Year (TLT)

The US 10-Year rose to around 1.14% today, and the next area of resistance comes around 1.2%, but it really seems to be much higher, around 1.4%.

Tesla (TSLA)

To no surprise, Tesla fell sharply today, especially given how much it was up last week and everything I discussed in the video on Sunday. The stock has several gaps to fill, and it would not surprise me to see it drop back to $730.

Square (SQ)

Square dropped by around 6% today, and I’m surprised it wasn’t down more given its ties to Bitcoin. A drop below $216 could be problematic, as it would likely mark the formation of a double top pattern, a bearish pattern. So we will see if $216 holds tomorrow.

Facebook (FB)

Facebook fell sharply today through support at $259. The next level of support may not come until the 200-day moving average around $246, but $241.40 seems more likely.

Amazon (AMZN)

Amazon fell by 2% this today, dropping to $3,115. Perhaps today’s trading marks the break in the action and finally pushes the stock lower towards $2,870.

Take care


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