The Vaccine Data May Have Just Signaled A Sell The News Event
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The Vaccine Data May Have Just Signaled A Sell The News Event


Stocks – NVDA, ZM, SQ, SHOP, XOM

Macro – SPY, QQ

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The day started great and but didn’t end in the same manner in which it started. The S&P 500 surged by more than 3% on Pfizer’s positive news that its COVID vaccine had 90% efficacy, which is amazing. It happens to be much better than anyone expected.

S&P 500 (SPY)

However, the index gave back nearly all of those gains by days end, finishing higher by around just 1.1%, while the NASDAQ 100 QQQ ETF fell by over 2%. I hate to say it, but the vaccine’s news may serve as a selling event. It triggered a massive liquation across many of the technology names many people have grown to love. Many of these technology names are extremely overvalued, which means they can fall a lot before people step in and start repurchasing them. Just consider that.

The S&P 500 gapped higher to start the day but began to fill the gap by days end. It would need to fall back to 3,520 to fill it. I really don’t see a reason why the S&P 500 can’t fall back to 3,310 over the next few days to a week. The vaccine news is great, and no one is more excited than I am, but let’s face facts, there is still plenty of time for that.


Meanwhile, I think the selling action is just getting going in the Qs. With a vaccine coming down the road, the market will need to reprice all of these technology stocks. Nobody thought Pfizer’s vaccine would be this successful. That means while many of these stocks have a really bright future, it may not be bright enough to justify some valuations.

Additionally, it isn’t likely that the financial sector will rise by almost 8% every day, and the energy sector will jump by over 14% to offset the declines in technology.

Zoom (ZM)

Like take Zoom, the stock fell 17.7%, and it is trading for 36 times 2023 sales estimates. Hey, that’s a lot by anyone’s standard. Maybe it fills the gap higher and goes back to $504, but then again, if it goes below $408, it will probably be $325. The RSI doesn’t even have it oversold yet.

Shopify (SHOP)

Shopify trades for 21.6 times 2023 sales estimates, a bargain compared to Zoom. Great business, a great prospect for the future. Probably should trade for a lower multiple, though. A drop below $910 sets up that drop to $850, which sets up a drop to $740.

Square (SQ)

Square, with its $83 billion market cap, and trades with a 2022 PE ratio of 101.5, and 2022 EV/EBITDA ratio of 75, and a 2022 PEG ratio of 3.6. Again, a great company, a bright future, just very, very expensive. I wouldn’t be surprised if this were back at $162 fairly soon.

Nvidia (NVDA)

Nvidia, which trades for 44.5 times 2023 earnings estimates, a price to sales ratio of 16, and a lot of dilution coming to buy ARM. Again, a great future, but it doesn’t mean the stock isn’t expensive; it absolutely is beyond expensive for a chip company. So if it breaks the uptrend for a second time, is there a good chance it goes back to $460, probably.

Exxon (XOM)

Hey, but Exxon had a great day; I guess people will be driving a little more if you get a vaccine. Hey, but don’t worry now that Exxon rose today and Zoom fell, Exxon’s market cap has passed Zoom once again. Imagine that.

Take care


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