Story

Big Tech Wrecks a Blue Chip Rally

Daily Market Comment

May 10, 2021
DAILY MARKET COMMENT

Big Tech Wrecks a Blue Chip Rally

It was a split market today that didn’t end well. Coming off a new record high last Friday, the DJIA rallied at the bell on strength in cyclical plays and briefly crossed 35,000 before erasing the gains to finish 34.94 points (-0.10%) lower at 34742.82 on -2% losses in Intel (INTC), Visa (V), Apple (AAPL) and Microsoft (MSFT). On the flip side, the NASDAQ stumbled out of the gate on selling in technology shares and dropped 350.38 points (-2.55%) to 13401.86, but found support at its 100-day moving average (MA). Semiconductors were hammered after a downgrade on Intel (INTC) and the Philadelphia Semiconductor Index (SOX) lost -4.66% and closed below its 100-day MA for the first time since May 2020. Shares of chip maker Qorvo (QRVO) tumbled -6.90%. Technology (XLK) was the weakest market sector down -2.50%, but found support at its 50-day MA. Communication Services (XLC) was also hit hard on downgrades of Alphabet (GOOGL) and Facebook (FB) by Citigroup. Defensive sectors Utilities (XLU), Consumer Staples (XLP) and REITs (XLRE) outperformed. Steel stocks were a pocket of strength led by Nucor (NUE). The big cap NASDAQ 100 was the worst performing index down -2.63%, while the small cap Russell 2000 fell -2.59%.

Breadth was negative with declining issues beating advancing issues 2:1 on the NYSE and 3.3:1 on the NASDAQ. Declining volume was 65% on the NYSE and 70% of the NASDAQ. The VIX spiked 2.97 (+17.80%) and finished at 19.66. Crude oil prices eased 0.09 (-0.14%) and the June contract closed at $64.81 a barrel. Gold prices rose 7.70 (+0.42%) and finished at $1839.00 an ounce. Bitcoin (BTC) ended the session at $56,400, down 6.57%.

The Dow Jones traded sharply higher in a broad based rally early today but the selling in big cap tech was too much for the blue chips the last hour of trading. However, the number of new 52-week highs on the NYSE hit 711 today, which is close to a record number, and the NYSE Advance/Decline line, a leading indicator of market direction, is coming off a new high from Friday. The rotation into cyclical and reopening stocks remains strong, but the overweighting of the big cap tech shares overpowered that move today. The drop in prices did catch the attention of nervous traders as the VIX jumped to its highest level since late March. Keep an eye on key moving average support levels tomorrow. If selling is subdued at the open we should see buyers come off the sidelines and pick up beaten down shares.

Earnings releases to watch for on Tuesday include: Array Technologies (ARRY), Electronic Arts (EA), Hanesbrands (HBI), Palantir Technologies (PLTR) and Unity Software (U).

Tuesday’s Market Moving Economic Calendar: Small Business Optimism Index and JOLTS.

By David L. Blake, CMT



Login to MarketEdge

Login
Don't have an account? Sign up now.

Market Indicators

Market Posture Cyclical Trend Index
Bullish
1
As of: 11/13/2020
As of: 05/07/2021
Looking for the S&P Oscillator?
The proprietary S&P Short-Range Oscillator is a number that is calculated each market day and helps professionals measure the pulse of the market.
Published for decades only as part of an S&P Trendline/Daily Action Stock Charts subscription, the proprietary S&P Short-Range Oscillator is now available exclusively by special arrangement through Computrade/MarketEdge®
Click to Sign Up

Second Opinion Performance

Second Opinion Status

3033

Current Opinions
As of: 05/10/2021

88%

Long Accuracy
As of: 05/10/2021

71%

Avoid Accuracy
As of: 05/10/2021
Click For More Details

Market Recap - 05/10/2021

Index Close Day Change Day % Change YTD % Change
NASDAQ COMPOSITE 13401.86 -350.3 -2.55% 3.98%
DJ UTILITIES 919.93 10.03 1.1% 6.39%
DJ TRANSPORT 15929.46 -13.84 -0.09% 27.36%
DJ INDUSTRIALS 34742.82 -34.94 -0.1% 13.51%
NYSE COMPOSITE 16516.83 -73.61 -0.44% 13.71%
S & P 100 INDEX 1895.01 -24.27 -1.26% 10.14%
RUSSELL 2000 2212.7 -58.93 -2.59% 12.04%
S&P 500 4188.43 -44.17 -1.04% 11.51%
CBOE MKT VOLATILITY 19.66 2.97 17.8% -13.58%
AMEX COMPOSITE 3078.75 -26.73 -0.86% 30.4%
Dr MarketEdge Talks Stocks



Tuesday, May 4th 2021, 12:00 am

Pricing

$29.95/mo.

Get Started

Second Opinion on over 3400 stocks, nightly updates for stocks on your watchlist, dozens of tools to find the right stock at the right time, as well as real human support available by chat, email, and phone.

About MarketEdge

MarketEdge is a unique suite of investment tools developed by Computrade Systems, Inc. The purpose of our service is to provide quality, independent research in a manner that is both easily understandable and immediately actionable for individual investors as well as professional money managers. MarketEdge features Second Opinion®, a comprehensive computer-generated technical evaluation of more than 3,400 stocks, along with fundamental research from Standard & Poor's. MarketEdge will generate daily investment ideas for every type of trading strategy thereby enabling one to trade and invest with a consistent, disciplined approach in all market environments.

Logging in...