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Technology Sell-off Continues As S&P 500 Makes Big Reversal
It was another wild day on Wall Street, with the Technology S&P 500 having a huge reversal. Stocks open strongly, but Technology began to fade by mid-morning, and by the close, the S&P 500 had reversed a nearly 80 bps advance to close down by 10 bps.
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It has been a while since I have written about our old friend, the February 2016/Brexit trendline. It is a trend line I have been merely extending, as the days and month have gone by for nearly two years, and still, it holds a level of importance almost 2 years later.
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When we look at the chart more closely, we can see that the S&P 500 was able to rise above that trendline, something that has not been able to achieve for a while.
We can see that it is acting as a strong level of resistance still, and the S&P 500 reversed after hitting it. Could we be looking for a retreat to 2,600? Sure. Is it a big deal? No. In fact, the trading action the last couple of days has been absolutely nuts.
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VIX
The Vix was up modestly today, to about 11.68, undoubtedly very low levels still. If you haven’t seen this article on the ZeroHedge or the video that goes with it, check it out. It is fascinating.
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Netflix
As noted in our blog write-up from Friday, Netflix shares continue to trend lower and seem to be heading back towards the lower end of the channel around $170. The resistance at $190, to this point, has held firm.
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Semi Stocks
The semiconductors continue to get slammed, with no sign of a bottom yet forming. We got the sell-off we had looked for, but instead of a bounce and rally into days end, the selling just continued. The only stock performing well in the group is Intel ($INTC), and that is because the stock has so badly underperformed all year-long.
NVDA Price data by YCharts
Intel
Intel shares are up only 22 percent so far in 2017, and while that sounds great it pales in comparison to the returns of Micron, Nvidia, and Lam which even after the massive sell-offs are still all up about 70 percent.
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Tech Wreck V12.4.17 – More Room Too Fall
Why Tesla Could Double, And Nvidia Could Get Cut In Half
Why The S&P500 Could Melt-Up Into Year End
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 Microsoft
Even big tech names like Microsoft ($MSFT) got clocked today, falling by nearly 4 percent on the day, to close at $81. Share of the stock are now in the middle of filling the gap, and likely to continue to fall back towards $79.
Apple appears to be rolling over as well, and looks ready to move back towards $160.
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Alphabet looks very close to a bottom.
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Banks
One of the big beneficiaries of this rotation has been the bank stocks, which have risen at the cost of Tech just look at the chart and the divergence below.
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Consumer Stocks
While Consumer discretionary stocks like Home Depot, Costco, Disney, and Starbucks have taken off.
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Technology Stocks
Technology merely got overextended, and now the shares of these stocks need to come back down. The XLK suggest it needs to fill that gap at $61 and return to its long-term trading channel, a decline of another 2 percent.
The bottom is coming in the tech wreck just not yet.
Free Articles Written By Mike:Â
Why Tesla’s Stock Could Rally Into Yearend
Disney’s Stock Advance Could Be Just The Beginning
Netflix Shares Could Be Headed Lower
Stock Prices Plunge On Emotion, Not Reality
Nvidia, Micron, and Lam May Not Have Bottomed Yet
Why Gilead’s Highly Touted Stock Has No Upside
Why Under Armour Could Fall 65%
How Tax Cuts Could Boost Home Depot’s Stock
Nvidia Could Fall 60% After Bubble Bursts
Why Intel and Broadcom Are Still Cheap
Apple Will Rise 17% by June, Options Trades Indicate
Why Roku’s Rocketing Stock May Flame Out
Verizon’s Stock May Rise More Than 15% in 2018
Biotechs Celgene, Biogen May Rally Through Yearend
AMD May Have Bottomed, Stock Set to Rise
Macy’s, JC Penney Face More Declines, Options Trades Suggest
Why Tesla’s Plunging Stock Price Conceals A Bright Future
Why Disney and Comcast Should Fear Netflix
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Michael Kramer and the Clients of Mott Capital own shares of $NFLX, $DIS, $SBUX, $GOOGL
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Tags: #sp500 #vix #chipmakers #micron #nvidia #news #stocks #consumer #starbucks #disney #banks
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Charts used with the permission of Bloomberg Finance L.P. 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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