It was a rough session for equities yesterday, specifically the grossly overvalued technology names. The S&P 500 did drop by around 80 bps, and I expect many of Monday’s gains to be wiped away, filling the technical gap at 3,810. There was no reason for the market to rise the way it did. Perhaps it was monthly inflows or implied volatility drop, but I don’t think there was any fundamental reason for it.
Given that rates are where they are, I don’t see how anything has changed.
10-Year Treasury
The 10-year Treasury has stabilized, but I would expect it to trade lower to around 1.3% before it trades higher again. Regardless, it won’t help equity prices. Valuations are being re-set and that is clear.
NASDAQ 100 (QQQ)
It is quite clear that the NASDAQ 100 (QQQ), like the S&P 500, appeared to be on a pace to refill its gap from Monday’s opening.
Roku
Roku (NASDAQ:ROKU) filled the technical gap yesterday after announcing a deal and a $1 billion equity offering. It isn’t clear to me when this deal will be priced. There does appear to be one layer of support left at $380 and once that goes, the stock should see a sharp drop back to $310.
Zoom Video
Zoom Video (NASDAQ:ZM) had a horrible day yesterday, after starting higher by almost 10%, it finished the day down 9%. The stock is likely to fall back to the deal price around $340.
If $340 doesn’t hold, the flood gates will open.
Apple
Apple (NASDAQ:AAPL) got up to resistance at $127.85 on Tuesday; a bad sign, and suggests that Apple moves back to $120.
Tesla
Don’t think that gap in Tesla (NASDAQ:TSLA) can’t get filled at $406. It can, and it likely will at some point over the next few weeks.
