Tech Wreck V2.5 – Tech Smashed as Banks Rally On Tax Reform
We have seen this story before, haven’t we? Tech gets smashed in one day, falling by 1 to 2 percent. It happened a number of times over the summer.
So how does it work, somebody wakes up one morning and says “I think we oughta sell Tech today.” I mean really, what changed in such a significant way that technology sold off so hard, driving the Nasdaq composite down by 1.25 percent? Autodesk ($ADSK)? Don’t think so, a company that makes $2 billion sales isn’t big enough to take a down group.
[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row] Join our 2,468 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe
Today’s sell-off in Tech started yesterday as we noted the weakness in some the leading technology names, despite a sharp rise in the S&P 500. As we have noted many times before, the technology sector had become overextended, as evidence of the XLK ETF. We had feared a sell-off, but like everyone gave into temptation that trend had merely shifted. To this point, the XLK is still holding the makings of this new trend, but it will be interesting to see how the market responds to today’s sell-off when trading continues tomorrow.
Tech Names Crushed
You name it, crushed, Nvidia, Tesla, Netflix, Micron, and Facebook were among the hardest hit, all declining by 4 percent or more.
Sign-up for our premium content on Seeking Alpha Market Place – “Reading The Markets” and a get Two Week Free Trial Period
Premium Content Is Great For College Students, Non-Professional, and Professional Investors. It is designed to focus on what institutional investors are watching, based on Mike’s 20 plus years of professional analytic, trading, and portfolio management career.
Premium Content: Benefits include the ability to reach out to Mike with questions through a chat room, direct message, or comments.
We will respond to questions in short order and will respond to questions with full-post or video segment, just not one or two-word answers.
Just $40 per Month
Rotation In To Banks
For today at least the money that moved out of technology and went right into financials, and the good news is that the money is not leaving equities, merely rotating. Banks are rising as a play on tax reform, not a rise on anything else. Because the banks happen to pay some the highest effective tax rates, at nearly 30 percent.
Tax Reform Plays
Disney and Starbucks are another two examples of stocks with high effective tax rates as well. Companies with high effective tax rates are going to be part of this rotation, and it is likely to continue.
Does it mean the sell-off will continue to come at the expense of Tech? Perhaps, tomorrow will be telling. If the sell-off in tech resumes tomorrow, the XLK could fall another 5 percent to around $60.50.
Free Articles Written By Mike:
We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get all our free commentaries sent directly to your inbox or follow us on Twitter.
Join our 2,468 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe
[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row]
Michael Kramer and the Clients of Mott Capital own shares of NFLX, GOOGL, TSlA, SBUX and DIS
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 recommendations made during the past twelve months. Past performance is not indicative of future.
© 2017 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.
Tags: #banks #technology #nasdaq #tax #reform #disney #starbucks #netflix #tesla