Interest Rates at a Key Level for Tech | Trading F, AVGO

Rates need to cool down for tech to stabilize.

Technical Breakdown 

• NYSE Breadth: 63.7% upside volume

• NASDAQ Breadth: 44.5% upside volume 

Given how nasty of a day it was in tech, I’m surprised the Nasdaq breadth wasn’t worse. The NQ futures opened at 16509.75 and rallied less than three points to its regular-hours high and then flushed lower, bottoming almost 400 points lower. 

All the while, the ES and SPY were only mildly harmed at the session low and closed near flat on the day. 

It was an impressive day for the broader market and far less impressive from tech. However, given the latter’s influence on the overall market, we will need some stability in tech to unleash more upside in the S&P 500. 

That reminds me: I keep hearing so many investors say that “FAANG is propping up the market.” Is that true, though?

Apple is fresh off all-time highs after hitting its $3 trillion valuation. That surely is doing some propping, and although impressive, it’s about 7% off the S&P 500’s total market cap of ~$42.5 billion. 

Alphabet is about 4% off its high, which is also okay. Same with Microsoft MSFT, for what it’s worth. But the rest of FAANG — “FAN” — is down double-digits from its high, (so is NVDA, the 8th largest company by market cap). Tesla was down about 10% from its high at yesterday’s low. 

Anyway, it’s just some food for thought. It’s not like FAANG+MNT are all sitting at new highs. 

Game Plan: Trading S&P, Nasdaq and Most Importantly 10-Year Rates

The Game Plan is pretty straight forward: Keep an eye on tech/rates. 

Relief in these two areas should spell relief for the whole market. However, more pain could eventually tug the overall market lower.

S&P 500

S&P 500 Futures | Daily

We’re looking at the S&P 500 futures, but as always, you can extrapolate the layout to the S&P 500 index or the SPY. 

It continues to hold its short-term moving averages and its prior breakout level over 4740. As long as those remain true, it’s hard to be too bearish. That said, we need a sustainable push over 4800 in order to get more momentum going on the long side. 

So far, it just hasn’t been there. 

Nasdaq