One Time’s Stumble or the Long Awaited Stumble?

The stock market underwent a relatively quiet week. Until Friday that is – when tech stocks fell dizzyingly, biting 1.8% out of the NASDAQ’s value, alongside sharp losses on other market indexes which had hit historic highs just the day before! The tech sector (XLK), which soared this year and led the latest stock market rally, plunged 2.7%, the stock of Apple (AAPL) falling 3.9% in its sharpest day of losses since April 2016. Other top tech stocks, beloved by investors far and wide, had the floor taken out from under them.

In Summary for the Week: The Dow Jones ended up 0.3%, the S&P 500 shedding 0.3%, with the NASDAQ falling 1.5%.

Facebook (FB) tumbled 3.3% on its sharpest day of losses since November 2016 and Google (GOOGL) fell 3.4%. The chipmaker, Nvidia (NVDA), which received a particularly favorable recommendation from Citigroup analysts just this past Thursday, fell 6.5% after Citron Research, known for its highly precise short projections, communicated its projection that NVDA was heading back to $130, and did it ever! NVDA ended the week at $130!

Based on a Goldman Sachs report, FB, AAPL, AMZN, MSFT, and GOOGL have a market cap constituting 13% that of the S&P 500, though have contributed 40% of the index’s gains this year. Goldman Sachs analysts have cast doubt on tech stocks’ pricing, stating that volatility in the sector has become so low that it’s become less volatile than safe haven assets, like utility stocks.

Tech sector profit taking was expected, the sector’s stocks priced at their upper range, investors now shifting funds to sectors that have lagged behind over the last few months like banking and energy stocks. The movement on the NASDAQ changes the tone as far as low market volatility goes. When we see a surge of movement the like of Friday’s, the only thing that is certain is that volatility is high and can work in either direction. What remains to be seen is how deeply implanted the psychological change is among investors; it goes without saying that these thoughts are what weighed on investors over the weekend. Though it doesn’t change the long-term outlook, Wall Street’s love affair with tech stocks can’t go on forever – and that’s what the market is trying to tell us!

The real test will be after the market’s next jump. You can expect correction buyers to pop up quickly and capitalize on the most recent losses. The question, though, is whether after the market corrects upward, it will again fall, leading to a lower high, which from a technical vantage point would signal that the market is likely in for more losses and lower price levels.

Stock market volatility is likely to pick up this coming week, as traders await the pronouncement of the Federal Reserve – and also wait to see whether last week’s shakeup and tech sector selloff will continue into this week, and more importantly, whether the hemorrhaging will carry over to other sectors.

The Federal Reserve will be convening for a 2-day meeting on Tuesday, the central bank expected to announce a quarter point rate hike on Wednesday afternoon.

A downpour of economic figures is expected this week, the lion’s share of the market’s attention, though, to be placed on Consumer Inflation (CPI) and retail chain sales numbers, which will both come out just hours before the announcement of the central bank’s decision on Wednesday afternoon at 14:00 N.Y. time. Consumer-side Core Inflation Index is expected to record a 0.2% gain, meaning an annualized clip of 1.9%, slightly beneath the Fed’s 2% target.

IndexLastDaily change
DJX0.42%21,272Up
SPX(0.08%)2,432Down
Nasdaq(1.8%)6,208Down

 

Have a great trading week!

 

 

Economic Calendar

 

DAYTIME (EST)EventForecastImpact
Tuesday8:30PPIHigh
Wednesday8:30Retail SalesMedium
Wednesday8:30CPIHigh
Wednesday10:00Business InventoriesMedium
Wednesday10:30Crude Oil InventoriesLow
Wednesday14:00FOMC Rate DecisionHigh
Thursday8:30Philadelphia FedMedium
Thursday8:30Export\Import Prices ex-ag.Medium
Thursday8:30Initial ClaimsMedium
Thursday8:30Empire ManufacturingMedium
Thursday9:15Industrial ProductionMedium
Friday8:30Housing StartsMedium
Friday8:30Building PermitsMedium
Friday10:00Mich SentimentHigh

 

Earning Calendar

 

SymbolCompanyAM/PMDay
HRBH&R Block, Inc.PMTuesday
JBLJabil Circuit, Inc.PMWednesday
KRThe Kroger Co.AMThursday
FNSRFinisar CorporationPMThursday
ALRAlere Inc.AMFriday

 

 

Today’s Picks – Day Trading!

SymbolBreakoutBreakdownMomentumMomentum
AIG$64.35KSSAAPL
DOW$64.91VSTOFB
TRV$125.80HPAAOI
CBI$15.00TGTSPLK
LBTYA$29.15URBNKLAC
SSYS$26.22JWNJD
BBBYAMZN
 AFLFTNT
  NVDA
  CTXS
  ADSK

  

New York Strategy Swing

#DateStockLong\

Short

StatuesData CloseProfit\

Loss

11.5.2017AAOILongClose2.5.2017+0.54%
23.5.2017SCSSLongClose9.5.2017-1.71%
34.5.2017CRZOShortClose5.5.2017+0.30%
48.5.2017WTWLongClose16.5.2017+6.09%
515.5.2017AANLongClose16.5.2017-1.70%
616.5.2017CCLLongClose17.5.2017-0.41%
717.5.2017AMAGShortClose24.5.2017+5.38%
817.5.2017AANLongClose24.5.2017-2.59%
919.5.2017TRCOLongClose23.5.2017-1.45%
1019.5.2017GIMOLongClose26.5.2017+2.05%
111.6.2017BF.BLongClose6.6.2017+0.95%
127.6.2017LULULongClose9.6.2017-2.24%
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