D&D Note (5.1.2020) ~ Stocks Fall Post Big Tech Earnings ~
Now that all the major Mega Cap Tech stocks have reported earnings the market has gone into risk off mode with all major indices falling on the day. All S&P 500 gains for the week have been wiped out today.
Sell in May and Go Away has started already with the first day of the month. Markets will likely begin to become more realistic and start to price in actual economic data.
The economic date is horrible and that means there is high probability there will be downward pressure now after the 50% retracement Bear Market bounce off the March 23 lows.
DOW down -2.41%
S&P 500 down -2.81% (2830.71)
NASDAQ down -3.20%
VIX up 8.90% to 37.19
Oil up 4.09% to $19.73 a barrel.
Elon Musk took to twitter to say his companies share are “too high.” This brought TSLA shares down over 9%. He certainly has a point and the shares have gotten ahead of themselves. When a CEO of a company says his shares are too high… you should probably take notice. D&D took profits in TSLA this morning and reduced our risk in the position.
Constellation Brands announces they increased their stake in cannabis company Canopy Growth pushing shares of CGC up over 10% in post market trading.
Overall D&D is still in sell mode. Our portfolio is 50% cash. While it is nearly impossible to time tops and bottoms an investor can dollar cost average both in and out of the market. We are looking for a retest of the lows in the coming months. Under 2600/2500 on the S&P 500 we are buyers and over 2800/2900 we are sellers.
Investors must also look at their individual holdings and trade not just on overall market levels but on specific stock position levels.
Of the invested half of our portfolio D&D has 47% in just four stocks which has been our core holdings: AAPL, AMZN, TSM, MSFT. These four stocks are our Four Horsemen. Our 5th largest stock by weighting is CGC in an alternative healthcare play via cannabis.
~ Dave James / Principal Trader and Market Strategist