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Tech Rollover Sinks U.S. Stocks; Bitcoin Falls Below $5,000 as Collapse Continues

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U.S. stocks booked huge losses on Monday, as plunging tech shares and wavering risk sentiment dragged the major indexes lower. The crypto bloodbath reached epic proportions Monday, as bitcoin slid below $5,000 for the first time since October 2017.

Stocks Lurch Lower

All of Wall Street’s major indexes headed for sharp losses, with the S&P 500 Index virtually erasing its yearly gain. The large-cap index fell 1.7% to 2,690.73, with nine of 11 primary sectors finishing in the red.

The S&P 500’s information technology component plunged 4%, with software, technology hardware and semiconductors shouldering the heavies loses. Communication services, a partial offshoot of big tech, fell 2.8%.

The tech-heavy Nasdaq Composite Index sold off 3% to close at 7,028.48.

Dow industrials were down across the board, with the Dow 30 index closing down 395.54 points, or 1.6%, to 25,017.68.

Tech Rollover Intensifies

The major tech titans that once led the bull market are buckling under the pressure of disappointing earnings forecasts and slowing global growth. Shares of Apple Inc. (AAPL) fell back into bear market territory on Monday amid reports the company was slashing production orders for its flagship iPhone products.

According to The Wall Street Journal, Apple has cut orders for the iPhone XR, XS and XS Max models by a third, signaling weak demand. The upgrades were unveiled in September around the time Apple was continuing a record-setting surge that culminated in a trillion-dollar market cap. Since reaching those peaks, the iPhone maker has lost more than $200 billion in market value.

The tech rollover on Monday extended far beyond Apple. Netflix Inc. (NFLX), Advanced Micro Devices Inc. (AMD), Facebook Inc. (F) and Amazon.com Inc. (AMZN) all posted major losses.

Plunging tech shares are usually a warning sign that investors are losing confidence in the bull market. The sector was largely responsible for the record-setting bull run that followed the election of Donald Trump in November 2016.

Crypto Carnage Intensifies

Bitcoin and the broader cryptocurrency market headed for new 13-month lows Monday, extending last week’s bearish breakdown. The bitcoin price pierced below $4,900 on Coinbase, levels not seen since October 2017. The leading digital currency is down a whopping 12% on the day and 22% compared with seven days ago. Over the course of the week, its market cap has plunged from $110 billion all the way down to $86.7 billion.

With the exception of XRP and the dollar-backed USDT stablecoin, all major cryptocurrencies in the top-ten posted double-digit losses on Monday. Losses among the majors ranged between 16% and 34% week-on-week. The combined crypto market cap, which includes bitcoin and altcoins, plunged to $164 billion. At the time of writing, the cryptocurrency market cap was worth $166 billion.

There’s no telling just how deep the correction goes, though technical traders have identified $4,800 as a major inflection point for the bitcoin price. The selloff, which appears to be technical in nature, was sparked last week in anticipation of the bitcoin cash hard fork.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Analysis

3 Things You Need to Know About the Market Today: New High in Gold, Dow 26,000?, Euro Weakness

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1, Gold Jumps to 9-Month High, $1360 in Sight

Gold Futures, 4-Hour Chart Analysis

We have been following the resurrection of gold in the past few months, and since fundamentals just got better for the precious metal, the current technical strength is great news for long-term investors. Today, gold quietly reached a new 9-month high, despite the still ongoing risk rally and the relative strength of the US Dollar.

The metal topped the $1330 level, and with the next major resistance level being found near $1360, a quick surge to the vicinity is in the cards in the coming days. We continue to advise holding gold for the long run, and for now, the short-term technicals also remain bullish. Should the risk rally finally roll over, the uptrend could even accelerate, with longer-term targets being found near $1400 and $1550.

2, US Stocks Drift Lower After Long Weekend as Trade Talks Resume

Dow 30 Futures, 4-Hour Chart Analysis

US stocks are having a quiet start for the day, with the major indices drifting slightly lower following the long weekend. The US economic calendar is empty today, and all eyes will be on the trade talks with China which are set to resume today in Washington in the wake of the unexpected extension of last week’s round of negotiations in Beijing.

The Dow, which approached the 26,000 level last week during the Friday surge to new 9-week highs, is lower today, in-line with the market-wide trends. The mega-cap index could get a lift in early trading thanks to the better-than-expected quarterly report by Walmart (WMT). The firm’s holiday-quarter sales topped estimates, despite the reports regarding the widening growth-gap between online and brick-and-mortar stores, and in light of the positive guidance by the company, the pre-market surge in the stock is no surprise.

With the week’s main economic releases coming in the second half of the period, today we could be in for another choppy session on Wall Street. That said, the momentum of the recovery-rally continues to be suspicious, and especially given the weakness in the Nasdaq, investors should pay close attention to the Volatility Index (VIX), market internals and other under-the-hood indicators for signs of negative divergences.

3, Euro Under Pressure Again, Despite Sentiment Beat

EUR/USD, 4-Hour Chart Analysis

While the Dollar’s break-out to new multi-year highs still didn’t happen last week, technicals continue to agree that the long-term uptrend in the reserve currency will continue. The Euro, on the other hand, is still showing signs of broad weaknes, drifing lower against the Dollar and the Pound today, despite the better-than-expected German Zew Economic Sentiment report.

The indicator is still deep in negative territory, and together with the recent weakness in the Eurozone PMIs and industrial production, recessionary fears seem to be legit in Europe.

We will have a new batch of PMIs coming out tomorrow, and together with the Fed minutes a huge day could be ahead for forex markets and especially for the EUR/USD pair. The 1.12 level could be tested in the case of another negative surprise in the PMIs, while the Fed minutes will be under scrutiny even more than usual following the sharp dovish shift by the Central Bank.

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Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 466 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Pieces of April

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Hi Everyone,

An 86-year-old lady returns to work today after fracturing three ribs and removing several cancerous nodules from her left lung.

She isn’t a victim of social or economic injustice though. Ruth Ginsburg is a Justice on the United States Supreme Court and she is arguably holding the balance in a fragile legal system. So there’s a lot riding on her ability to perform. In fact, this was her first notably absence in 25 years.

President Trump has already managed to appoint two conservative Justices to America’s highest court. So there are now 5 conservative and 4 liberal judges serving. Should Ginsburg retire now or otherwise be unable to continue her work, it would give Trump the opportunity to sway the Supreme court to a 6 – 3 majority. Something that could very well shape US laws and policy for decades to come.

In this graph from The Economist, we can see conservatives enjoying a slight judicial bias since 1980. We would like to wish Ruth the best of success, may she live a very long and healthy life!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • US-China trade deadline: 10 days | Days to Brexit: 38

Please note: All data, figures & graphs are valid as of February 19th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Now that a shutdown has been successfully averted…

Sixteen states have already formed a coalition to ask the courts to block the President from proceeding and this battle could play out for some time to come. However, as the amount of money they’re squabbling over is relatively small, this partisan bickering probably won’t have much impact on the markets, short of any major breakthroughs or escalation.

Markets were up earlier during the Asian session but by now they are decidedly down. Brexit concerns, US-China Trade, and an apparent European slowdown are taking their toll, despite pledges from the central banks to prop them up.

The United States will come back from their long weekend today so the first few minutes after Wall Street rings the opening bell will be fairly significant.

Gold Surges

The shiny yellow metal has reached fresh highs this morning and is now at levels not seen since last April.

Precious metals such as Gold, Silver, Copper, and Platinum are increasingly being seen as a viable hedge against all the geopolitical tension mentioned above.

Crypto Optimism Continues

The crypto market is once again capturing the imagination of traders across the globe as volumes have now reached levels not seen since last April.

One of the cool things is that the number one gainer over the last 24 hours is EOS. As I mentioned in a YouTube session with Thinking Crypto last week, EOS is the number one coin in my portfolio, simply based on the token economics.

Though it’s easy to get excited. Please remember that we’re still very much in a bear market. So please trade with caution. Always remember to diversify your portfolio with other assets in order to keep your risk to a minimum.

Special thanks to Three Dog Night for the title of today’s market update.

Have an amazing day ahead!!

Best regards,

Mati Greenspan
Senior Market Analyst

Connect with me on….

eToro: @MatiGreenspan Twitter: @MatiGreenspan LinkedInMatiGreenspan |Facebook:MatiGreen

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 152 rated postsSenior Market Analyst at Etoro.com.




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Market Overview

U.S. Stock Futures Point to Tepid Tuesday Start as Democrats Vow to Fight Trump’s Emergency Declaration

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U.S. stock futures headed for modest gains on Monday, as the President’s Day holiday kept trade volumes subdued ahead of what’s expected to be an active week in the market. Meanwhile, cryptocurrencies exploded to the upside as trade volumes reached new highs for the year.

Stock Futures See Modest Gains

The U.S. futures market traded slightly higher in the holiday-shortened session. The Dow Jones mini futures contract edged up 14 points to close at 25,902.00. The benchmark Dow Jones index surged 1.7% on Friday en route to fresh three-month highs.

S&P 500 mini futures ticked up 1.25 points to settle at 2,778.25. The Nasdaq 100 mini contract rose 17 points to 7,080.75.

The New York Stock Exchange was closed on Monday for President’s Day. Regular trading hours are set to resume on Tuesday.

Further reading: Does this Chart Spell Doom for the S&P 500 Index?

Trump vs Democrats (Again)

As CCN reported earlier today, Democrats have vowed to fight President Trump’s emergency declaration to fund a new steel barrier on the southern border with Mexico. Trump exercised his executive powers on Friday shortly after signing $333 billion in new funding agreements that avoided a second costly government shutdown.

The new budget includes $1.38 billion in additional border funding, which is far less than the $5.7 billion Trump requested. By declaring a state of emergency, the president can divert funds from other programs to construct his new steel barrier.

According to The Wall Street Journal, the state of California has already announced plans to sue the Trump administration over the declaration. Xavier Becerra, the state’s Attorney General, told CNBC this weekend that he “definitely and imminently” planned to pursue legal action.

Crypto Bulls Ignite New Rally

Crypto markets put on a show Monday, as the asset class rallied more than $12 billion in the span of a few hours. The combined value of all cryptocurrencies peaked at $133.2 billion, according to CoinMarketCap. That’s the highest level in over five weeks.

The rally was sustained by an incredible surge in trade volume. Turnover spiked more than 66% to $33.4 billion, far exceeding the the volume surge that accompanied the mid-November selloff.

The top 40 cryptocurrencies all reported gains. Bitcoin, the largest of the digital assets, rose 8.4% to $3,932.72. Ethereum climbed 14.4% to $146.89. XRP climbed to $0.3232, having gained 7.6%.

EOS was the standout performer, as the price rocketed 23.5% to $3.48. The cryptocurrency is trading at its highest level since November.

Litecoin maintained its bullish posture, as the price surged 12% to $48.48. Bitcoin cash rallied 19.1% to reach $145.44.

For more on the Monday crypto rally, read: Cue the Crypto Recovery: Coins Surge $9 Billion Overnight as Ethereum, EOS Break Out.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 772 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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