Tech Darlings Trip Up Bull Run

2020-09-03

Trader-favorite technology stocks took a punch to the face Thursday as a sudden gap down sent shivers through the stock market.

Tech darling “FANG” stocks — Facebook, Amazon, Apple, Netflix, Google (Alphabet) — dropped significantly. The retracement also hit Tesla hard for the third straight day.

The Dow closed at 28,292.73 points to fall 2.78% (dropping 807.77 points on the day). The Nasdaq dropped to 11,411.96 points for a 5.35% tumble while the S&P 500 crumbled 3.95% to 3,439.35 points.

During intraday trading, the Dow was down more than 900 points.

Simpler’s traders have been “cautiously bullish” for weeks with anticipation that this type of sudden pullback was in the making.

Expectations are this is an even more volatile environment with violent back-and-forth likely in the mix and possibly more selloff through Tuesday. Simpler’s traders are being careful about trying to apply what has worked in the past when the market was pushing straight up. Especially with the potential for a market personality change.

Traders getting too stressed with this type of momentum shift may want to reassess the capital at risk and number of active trades. Going flat with cash on hand is a viable option — when in doubt, get out.

After adjusting to the pullback, Simpler’s traders are working to protect gains made in August.

As was stressed in live trading today, our traders are satisfied to maintain previous gains made during this hard-charging rally. There appears to be room for the market to continue selling off and still maintain a bullish trend.

We’ll work to stay patient and cautious about market status while enjoying being flat and watching how this turmoil plays out.

We Saw: a sharp gap down in key stocks, sectors — 

  • Indexes taking a beating on the day
  • So much for Dow rush toward 30,000
  • Big tech bringing down the house

We’re Watching: for a bullish rebound to the upside —

  • Any signals that the bullish rebound isn’t happening
  • Holding onto our “patience” card, guarding gains
  • For setups with a new lease on life

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