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Tough Days For Tech Stocks

Dear Rundown Reader,

Opinions are near evenly split as to whether you’d rather have an ounce of gold or the dollar equivalent in bitcoin.

A few months ago when we asked a similar question responses were about 80 / 20 in favor of bitcoin.

Some readers even called us a moron, a fool, for suggesting gold was anywhere near as good as bitcoin.

As a trade, six months ago, this probably made sense. But now?

Tough call, right? Gold has withstood war, famine, depression, high tide and low for thousands of years. What has bitcoin withstood?

On that score alone, gold remains the ultimate store of wealth.

Never thought we’d make the classic gold bug argument, but there you have it.

Your Rundown for Thursday, March 29, 2018…

FAANG’s Get an Attitude Adjustment

The tech sector is seeing red.

FAANG stocks took the brunt of loses, falling 5.6% collectively Tuesday. For the week the tech giants are down over 6%.

It appears Facebook’s data mismanagement has opened a Pandora’s box for big tech.

The Wall Street Journal notes, “The S&P 500’s information technology sector has fallen about 5% over the past week. The consumer discretionary sector, which houses Amazon and Netflix, dropped 1.1%.”

But has the Facebook debacle really been the culprit for such sweeping loses in tech?

Yes and no. Facebook’s problems haven’t done anyone any favors. Take Twitter for example.

Twitter shares fell 12% through trading Tuesday, closing at $28.07.

According to CNBC, Twitter’s sell-off was triggered by growing concerns of “more regulation over its social media platform after Facebook’s controversy.”

The Wall Street Journal further notes Facebook’s “backlash over how social-media firms manage user data and doubts that Facebook and Alphabet can extend their dominance in digital advertising” have caused a fast bump in negative sentiment for growth.

Our research expert Greg Guenthner noted yesterday two tech darlings were hit over fear of not being able to deliver on big growth promises.

Nvidia Corp. (NASDAQ: NVDA) finished Tuesday trading down almost 8%.

Tesla Inc. (NASDAQ:TSLA) stock also posted a major breakdown Tuesday.

Shares slid below $300 for the first time since November after news hit that the National Transportation Safety Board opened a probe into a fire that resulted from a Model X crash in California.

The stock dropped more than 8% by the closing bell.

Tech’s going through a cascade of selling right now, and it’s bigger than Facebook’s problems.

Six months ago, no one would have batted an eye over Facebook selling user data. After all, as we noted in last week’s Rundown, that’s how the company makes money.

But sentiment has taken a dramatic turn against big tech.

That’s a huge shift from 2017 when buying tech stocks was a near can’t-lose investing proposition.

Tech will be back. For now the sector is in reset mode.

Plan accordingly. Be patient.

Greg, Ray Blanco and the rest of the team are keeping tabs on the trading action. More details soon.

Now, turning to the markets this morning…

Market Rundown for Thurs., March 29

S&P 500 futures are up 9.75 this morning at 2,617.

Oil’s flat at $64.75.

Gold’s down slightly at $1,329.

Bitcoin continues to slide, going for $7,486 this morning according to CoinDesk.

We’ll talk again tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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Aaron Gentzler

Aaron Gentzler is the Publisher of Seven Figure Publishing. He's been researching and writing about technology and markets for over a decade and is a graduate of Penn State and Johns Hopkins.

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