Stocks Slip for a Third Straight Week

We’re more than halfway through September, which is certainly living up to its reputation as a tough time for the market.

Stocks put together five straight months of gains heading into this one, but now they’ve just completed a third consecutive week of losses.

The NASDAQ and Dow were both down approximately 0.6% over the five days, while the Dow was off 0.03%.

A silver lining is that these losses were much smaller than the previous ones. For example, the NASDAQ plunged 4.2% last week and 3.4% the week before that. The other indices were down by about 2% or more each time.

This week had a good start and investors were hoping that the worst of the pullback was over. However, tech continued to lose money as the market fears being overheated at a time of such uncertainty.

The big event this week was the Fed meeting on Wednesday when the Committee stated that rates would stay at these historic lows until 2023 at least.

However, the market didn’t react as favorably as you might think, perhaps because it’s a reminder of how long the impact of this pandemic can be with us.

Plus, we’re still waiting on help from Washington since the original aid expired weeks ago, and now most people are skeptical it will come at all before the election.

The NASDAQ moved more than 1% each day this week. Unfortunately, the last three were all lower. On Friday, it was off 1.07% (or nearly 117 points) to 10,793.28.

The FAANGs also saw three straight sessions in the red. Apple (NASDAQ:AAPL) had the sharpest decline of almost 3.2% today, while Alphabet (NASDAQ:GOOGL) (GOOG) dropped about 2.4%.

The S&P actually saw the biggest loss on a percentage basis by dipping 1.12% to 3319.47, while the Dow slipped 0.88% (or around 244 points) to 27,657.42.

Today’s Portfolio Highlights:

Counterstrike: “The 21-day MA was 3422 and the last two weeks that was sold. The 50-day has been in the low 3300 and rising and we finally saw the first close below it since April 23rd.

“A break below the MA isn’t a death sentence, but it brings selling pressure into the market as retail is stopped out, quants start to hedge and algos amplify the move lower.

“Looking for support, the 3225 area is a level of interest as that’s the 61.8% support zone from the June 26th lows to recent highs. If we break that, the 200-day could come into play at 3100. The shorties shouldn’t get too excited as this market still has momentum buyers supporting it. If they take back the 50-day we could easily see a squeeze back up.

“Big week next week on the technical front. I will be excited to see some continuation lower as I want to get my shopping list out and get you guy in some of these high flyers. Getting a stock like Amazon (NASDAQ:AMZN) under $2800 would be great and there are many others on my list that I’m ready to pounce on. Let’s hope we get it next week.” — Jeremy Mullin

Options Trader: “Pullbacks and even corrections, however, are common. In fact, stocks usually pull back about -5% roughly 3-4 times per year. And corrections usually happen about once a year.

“So we’ve all been thru these things time and time again. Just part of the market. And given the market’s spectacular run-up over the previous 6 months (the Nasdaq for example surged by more than 81%), a pullback or correction was bound to happen eventually. And that’s what we’re seeing.

“The question, of course, is when is it going to stop?

“The major indexes look to be putting in a bottom. And with an improving economy and expectations for unprecedented growth for the remainder of the year, not to mention near zero interest rates for the foreseeable future, there’s ample reason to expect stocks to move sharply higher.

“And then when a vaccine finally comes out, stocks could soar.

“Next week should be a busy week. There’s plenty of economic reports on deck. And we’ll see if the markets can finally end their pullback and start heading back up the way the fundamentals suggest they should.” — Kevin Matras

Have a Great Weekend!
Jim Giaquinto

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