The major tech and social media components of the Nasdaq-100 got dumped this week as investors grappled with the meaning of even higher Treasury yields and the increasing price of oil. The sense that the stickiness of inflation may continue to stick is an unsettling factor for the actively traded equities that make up the index.
With the 10-Year Treasury note now yielding 5% and with West Texas Intermediate Crude back up to $90 a barrel, it’s tough to make a case that serious inflation is about to become less serious. The unpleasantness of what might ensue is leading to the selling of big stocks that were until recently pursued with a vengeance.
Nasdaq 100 actively traded stocks.
Take, for example, the daily price chart for Apple
AAPL
You can see how it peaked in July up just past $197.50, sold off and now trades for $172. The 50-day moving average (the blue line) shows how price is unable lately to close above that down trending indicator. Will the late September support level of $167.50 hold?
Comedian and social critic Jon Stewart just left Apple TV citing issues he says the company was having over his use of China and artificial intelligence as topics. He can’t make fun of Chinese leaders and of AI?
If that’s the case, it’s not a good sign for the Apple TV platform and for the company that they’re so sensitive about controversy — it’s Jon Stewart, why did you bring him on in the first place? Investors in Apple might be having questions.
The daily price chart of NVIDIA
NVDA
DIA
The support level is that red dotted line that connects the late June low with the August low and the September low. If penetrated, the stock may fill the late May gap (red circled) when a good earnings report led to a buying frenzy.
Note that it looks as if the 50-day moving average is rolling over, slowly. A gap fill would also be a test of the up trending 200-day moving average — so, it’s going to be interesting.
Here’s the daily price chart for Tesla
TSLA
The stock is down from the July peak of $300 to this week’s low of $211, a 3-month drop of 30%. That it’s fallen below the August low, a former price support level, is less than encouraging.
Friday’s earnings report came in at less than expected — but the lack of buying in Tesla may be related to the sense that CEO Elon Musk’s botching of his $44 billion Twitter purchase lacks the “visionary genius” vibe previously created by the financial media. Investors re-assessing their opinion of his leadership qualities could be re-assessing the wisdom of holding onto the car stock.
If the yields in Treasury bonds and notes continue upward, it’s a sign that market participants do not believe the Fed’s interest rate policies are on track. If the price of oil continues upward — with events in the Middle East causing concern — previous highs may be tested. These factors are key issues for the major Nasdaq-100 components listed above.
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