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*U.S. TECH STOCKS TUMBLE, PUSHING NASDAQ 100 INDEX DOWN 2.4%
A colossal sector rotation stole the headlines today, a sell-off in Big Tech shares ruined the wild party mood for stocks.
Since May 19, the Rotation
US Steel $X +18.5%
Banks $KRE +8.3%
Steel $SLX +7.4%
Russell 2000 $IWM +5.5%
S&P 500 $SPY +3.4%
Nasdaq 100 $QQQ +0.2%
Nasdaq, Worst Week of 2017
Apple (AAPL), Alphabet (GOOGL) Class A shares, Microsoft (MSFT), Facebook (FB) and Amazon (AMZN) — lost more than $100B in market value between the close on Thursday and the close on Friday.
For most of the day, only 3 stocks in the S&P 500 tech sector were in the green: IBM (IBM), Teradata (TDC) and Western Union (WU). Apple, Facebook, Amazon, Netflix, and Alphabet all traded more than 2 times their 30-day average volume.
Largest 5 Nasdaq Stocks
Before Election: $1.8T
Big tech has led the equity market higher in 2017. The S&P 600 is up 2% on the year (1.4% today) while Big Tech was 20% higher.
PowerShares QQQ Trust Series 1
Today, we witnessed the second highest notional trading volume since 2009, at nearly $14B.
Shares of Apple fell nearly 4%, while the other four companies fell more than 3%.
Stealing the show was a colossal macro centered rotation out of crowded Big Tech (FANG off 4%) into under-owned value (Steel and Energy names). At one point today, U.S. Steel X was up 22% from last month’s lows.
Winners in Financials
Financials were also a rotation winner with names like Goldman Sachs GS breaking a four month down trend.
At one point last week, Goldman was 18% off this year’s high – big reversal this week.
Where Did the Money Flow?
Emerging debt ETFs saw the largest weekly inflows in more than four years of available data, adding $1.4 billion for the week ended June 7, equivalent to 3% of assets under management. This marks a 23rd straight week of inflows since Dec. 28 totaling to $12.3 billion, 28% as a share of assets. – Bloomberg
Big Tech Rollover in the QQQs
Today will mark a key sector rotation inflection point. Market leadership is shifting from the loved to the un-loved.
Amazon Flash Crash
Quants and algorithmic trading now make up over 30% of the volume across several of the major exchanges. That’s up from less than seven percent five years ago. What’s the only problem with a quant driven market? At the first sign of trouble, the machines simply back away – air pockets are far more common today.
Powerful Inter-Day Reversal
We witnessed classic blow off top signals in multiple names today – always watch for the new high with a close below the previous day’s low on volume. A beautiful NVIDIA candle blew out today – years from now this one will be remembered.