≈ Can tech rally while banks struggle? ≈

Traders,

Recent price action has been very bullish for large cap technology stocks.  Just in the past month, here are some of the biggest gains amongst tech stocks that are $200 Billion in market cap or larger:

• TSLA +53%
• NFLX +24%
• AMZN +21%
• NVDA +14%
• ADBE +14%
• AAPL +13%
• PYPL +12%
• MSFT +11%
• JD +8%
• GOOGL +7%
• FB +6%
• INTC -2%

The incredible performance has lifted much of the market, with these heavily weighted companies keeping stock investors bullish, charts moving higher and indexes floating. 

Today, these stocks are starting down, after a day of profit taking during Monday’s trading session.  California’s Governor Newsom rolled back their re-opening plans and ordered all bars, restaurants, and theatres to close back down due to Covid-19 infections climbing.  There is also more ruffling between the US and China. 

But the important analysis is going to happen outside of momentum stocks.  The strength in Tech has hidden some of the weakness in the distressed areas of the markets, including financial stocks.  JP Morgan (JPM), Wells Fargo (WFC) and Citigroup (C) all reported earnings this morning with mixed results, at best.  Trading profits were strong for JPM but they had to reserve over $10 Billion for upcoming defaults on loans they expect.  Citigroup expects a much larger downturn than they did previously.  Wells Fargo cut their dividend and held over $9 Billion for defaults to upcoming loans.

And, another distressed stock, Delta Airlines (DAL) took a -$3.9 Billion loss and does not see air traffic recovering for over 2 years.

The question is this, can Tech and other momentum stocks that have been performing strong continue to rally in the face of bad earnings reports, dire economic projections from firms and more Covid-19 lockdowns? 

For now, the trends are in place, the 2 day sell-off is just that, a few red bars in an uptrend.  Keep an eye on the market response this week on a day by day basis.  As charts adjust and change, opportunities will arise on both the bullish and bearish side of the aisle.

#TeamTackle

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Chart of the Day

QQQ – Nasdaq 100 ETF – Daily Chart

The Nasdaq has been the strongest major stock index during the uptrend.  Yesterday, we saw a red reversal candle for the first time in a while. 

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Video of the Day

Candle Patterns (With Examples)

Learn how to interpret candlesticks in context and spot buying and selling opportunities from Coach Noah in this Trading Concept Check video.

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Today’s line up

Traders Lounge 11 AM EST

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Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

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