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Stocks Fall Sharply And May Have Much Further To Go

By Michael KramerStock MarketsMar 25, 2021 02:38AM ET
www.investing.com/analysis/stocks-fall-sharply-and-may-have-much-further-to-go-200569374
Stocks Fall Sharply And May Have Much Further To Go
By Michael Kramer   |  Mar 25, 2021 02:38AM ET
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Stocks had another weak session Wednesday, with the S&P 500 falling by 55 bps, but it was more than 1.3% off its high of the day, so it was a big Intraday reversal. Meanwhile, the Qs finished the day lower by almost 1.7%.

The selling pressure has been fierce late in the day more recently, and I’m not sure if this is part of the quarter-end rebalancing or there is something more at play here. Regardless, things could start to get ugly, especially for some of these overvalued technology “disruptors.”

NASDAQ Qs

If the Invesco QQQ Trust (NASDAQ:QQQ) falls below support at $310, it will quickly send the ETF back to around $300, filling a gap from Mar. 9. However, that may not be enough because the RSI isn’t even close to being oversold yet, and volume levels are still strong. Is a drop back to $275 possible? Well, if we drop below $300, we will find out.

QQQ Daily Chart
QQQ Daily Chart

S&P 500

There was still a gap that needed to be filled in the S&P 500 at 3,830, and if that happens, the long-term March uptrend will break for a second time, and I don’t think good things follow.

SPX 1-Hr Chart
SPX 1-Hr Chart

Because the damage has been done, yields have risen, and spreads have widened dramatically. That was strengthening the dollar, and that with all of the other disruptions in the world will help the dollar continue to strengthen. That will be a big problem for many asset classes, and it will most certainly kill the reflation trade. Even if yields begin to drop some on the 10-year, they are not going low enough to boost technology anytime soon.

DXY Chart
DXY Chart

Biotech

Risk-on has turned off, and biotech is the best example of risk in the market. The SPDR® S&P Biotech ETF (NYSE:XBI) was down more than 25% in the past month, and it probably isn’t finished falling. It hasn’t even hit oversold conditions yet, which means the trend isn’t even close to reversing.

XBI Daily Chart
XBI Daily Chart

Bitcoin

Another risk-on play has been Bitcoin, and that looks like the uptrend has broken. This will really be interesting to watch. My view on bitcoin is not favorable.

BTC/USD Daily Chart
BTC/USD Daily Chart

Micron

Another brutal day for Micron (NASDAQ:MU) as the stock fell below support around $86, and there could even be a double top pattern in the stock. If that is the case, then $74 is probably only the start of the decline, with $58 or $50 on the board.

Micron Technology Inc Daily Chart
Micron Technology Inc Daily Chart

Roku

Roku (NASDAQ:ROKU) fell hard on Wednesday, resting on support at $318. I don’t think this is a retest of the low on Mar. 8, I think it has even further to fall, probably back to $275.

Roku Inc Daily Chart
Roku Inc Daily Chart

Zoom Video

I’m so tired of Zoom (NASDAQ:ZM), just break down and go to $275 already, we know its coming.

Zoom Video Inc Daily Chart
Zoom Video Inc Daily Chart

Teladoc

So when Teladoc (NYSE:TDOC) falls below $180 does it stop at $150 or go straight to $87?

Teladoc Daily Chart
Teladoc Daily Chart

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Stocks Fall Sharply And May Have Much Further To Go
 

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Stocks Fall Sharply And May Have Much Further To Go

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Comments (3)
Pamp Ett
Pamp Ett Mar 26, 2021 12:58AM ET
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Looks like SPY didnt fill that gap all the way today, whats your take now?
Damian Wahner
Damian Wahner Mar 25, 2021 9:38AM ET
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You have been right in the past no time to say anything different.
john dislias
john dislias Mar 25, 2021 5:48AM ET
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No dont have further decline
 
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