Can You SPOT the Big Drop? [3 Must-See Charts]
Trump did it again!
Futures slipped deep into the red late Thursday when Trump threatened to triple tariffs on Chinese goods, tacking on another $100 billion to the existing proposal.
Will the stock market dig out of its rut and find positive territory before the weekend?
Let’s turn to the charts to find out…
1. Spotify slides in its market debut
Spotify’s Wall Street debut is a success, touts the New York Times
“On its first day of trading on the New York Stock Exchange, the music streaming service finished with a valuation of $26.5 billion,” the Times gushes. “The share price closed at $149.01, giving Spotify a market value similar to that of companies like M&T Bank and General Mills.”
That’s all true.
But it’s also important to note that Spotify (NYSE:SPOT) opened trading near $170 per share — only to drop more than 11% from its highs before its first day of trading was officially in the books.
It’s downright impossible to trade these initial public offerings right out of the gate. With no price history to use as a reference point, we have no idea what levels are important to buyers and sellers.
We’ll know more about investors’ appetite for this stock in a couple of months. For now, the best SPOT trade is to sit on our hands and wait…
2. Trump can’t keep Amazon down
Last week, I showed you how Trump’s Twitter attacks on Amazon.com (NASDAQ:AMZN) were weighing on the stock. Amazon shares tanked late last week as Trump claimed the company is doing “great damage to tax paying retailers”.
It’s no secret that Trump isn’t a fan of Amazon CEO Jeff Bezos. Sources claim Trump is “obsessed” with Amazon and wants to go after the company with antitrust claims. So it’s no surprise that Trump continues to hammer Amazon on Twitter (when he isn’t chirping about trade wars with China).
But someone needs to explain to Trump that the market discounts news only once. He can’t keep tweeting the same complaints about Amazon and expect the stock to keep tanking. Here’s his latest from yesterday:
But investors have already moved on. With no new threats of government intervention, Amazon stock is continuing its quick recovery as it bounces off support heading into the weekend.
Last week, shares of Amazon were down almost 10% from their March highs. But the stock bottomed out to begin the second quarter and looks like it’s putting in a meaningful bounce.
Bezos is getting the last laugh… for now.
3. FAANG gets too big for its britches
We all know Facebook, Amazon, Apple, Netflix and Google have earned their top spots as bull market leaders.
But this handful of the market’s most popular mega-cap tech names is now exerting outsized pressure on the major averages. These five stocks now make up a whopping 11% of the S&P 500.
“That’s nearly double what they represented in 2013, when Facebook first became part of the index, which only lists the most valuable public companies in the U.S.,” Recode reports.
File this little tidbit under why corrections are good for the market. As traders and investors, we prefer swimming in a market of stocks environment. The privilege of selecting from leading and lagging stocks and sectors is what gives us an edge over simply parking our money in an index ETF.
Still, each of these stocks has managed to claw its way out of the abyss as the market recovered late this week. As we continue to search for leadership coming off the market’s lows, we’ll have to wait and see if Silicon Valley’s elite can maintain their top standing as must-own stocks heading into the second quarter.