D&D Note (5.11.2020) ~ Equities Gap Down to Open Then Rally Off Lows ~
As it has been for most of the recent trading sessions the real action happens in the premarket with the opening bell either gapping up or down.
Last night a blow-off top began developing in the futures market. Today we gapped down to open then rallied off of the lows into the green. With two hours left in cash trading we began to reverse back down, then in final hour reversed again back up but finished the day mostly flat.
Markets were once again led by Mega Cap Tech. Once these key tech stocks reverse their momentum of recent it will drag the entire market down.
More consensus is being derived by market makers that equities have got overextended and a 10% drawdown is likely, perhaps even a 10-20% correction.
DOW down -0.10%
S&P 500 up 0.01% (2930.19)
NASDAQ up 0.78%
VIX spike then pulled back as equity markets began to rally to close down -1.47% at 27.57.
Oil fell -1.54% to 24.36 a barrel. Keep in mind there are 9 more days until the June contract expiration.
Bitcoin dropped last night and today to $8,630.50 and is facing a halving process soon which effect the miners and makes then have to mine twice as much to get paid the same.
Needham raises NVIDIA‘s price target to $360 with a buy rating stating gaming and data-center growth.
BTIG raises PayPal price target to $172 with a buy rating stating shift to digital payments.
~ Dave James / Principal Trader and Market Strategist