Growth And Technology Stocks Melt As Rates Continue To Rise

Stocks fell on February 22, with the technology sector hit the hardest and the Qs falling by 2.6%, while the S&P 500 fell by around 75 bps. Rates continue to be the name of the game, with the 10-year yield trading at 1.37%, up from 1.34% on Friday. Rates likely aren’t finished rising either.

S&P 500 (SPX)

The S&P 500 played a great game of filling the game this morning, trapping plenty of people with the end-of-day sell-off. The index rose right back to 3,902 and managed to fall the rest of the day to close at 3,877.

Still, I think at least over the short-term, a drop back to 3,780 appears to be where the index will continue to grind towards.

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The Qs finished the day below the November uptrend and below support at $323.50. Tomorrow will be a big day for the Qs; it will tell us a lot about what happens next.

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Growth Vs. Value

We have already seen the mean reversion in the QQQ to the IWM. As small caps rocketed higher in recent weeks, bringing the ratio back to pre-pandemic levels.

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The big question is if there will be a reversion to the mean in Growth vs. Value. That will be a harrowing experience if it continues at today’s pace.

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Tesla (TSLA)

Tesla fell rather hard today, blowing right through that $730 level to close at $716. The next level I am looking for is $695, but that may not hold either. Please do not discount the chance of it falling all the way back to $503. It sounds crazy, but the RSI uptrend off the March low is broken, and that likely means it has much further to fall before becoming oversold.

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Roku (ROKU)

Roku got a big price target boost today from Needham to $550 from $400. Still, the stock finished lower by 6.5%. The stock has an uptrend at approximately $425, but the bigger problem, other than its insane valuation, is that the RSI is very close to breaking down. If that is the case, and $425 doesn’t find a bounce, then the stock likely has much further to fall, like into the $200’s.

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Disclosure: Michael Kramer And The Clients Of Mott Capital Own Tesla 

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