Tech Wreck: 2000 Redux

Another of the tech darlings got pummeled after their earnings release.  NVDA bombed out with weak earnings and is down 17% in premarket.  It is a new 52 week low and the hyperbolic chart with a steep decline reminds me of MSTR.  For those who traded during the tech bubble days in 1999 and 2000, they will remember that MSTR (Microstrategy) was an internet darling until they reported horrible earnings in April 2000, promptly destroying the stock, it must have been a 40 or 50% down day, and I distinctly remember suicide posts in the MSTR Yahoo message boards.  This period coincides with the immediate aftermath of the March 2000 peak in Nasdaq.   

One by one, the tech favorites are getting heavily sold on lackluster earnings reports.  First it was FB in July.  then came AMZN in October, and then AAPL in November.  You can add NVDA to the list.  This is classic post bubble price action.  The law of large numbers and a slowing economy has finally caught up with the large cap tech momo names.  Without tech leadership, this market will have to find another sector to push up the markets, and I don't think health care, consumer staples, and utilities will get the job done.  Those sectors combined are too defensive and low beta, not enough juice to spur the averages higher when everything else is lagging. 

Forget about emerging markets or crude oil, the heart of this US bull market was the large cap technology companies: AAPL, AMZN, GOOG, FB, MSFT, NFLX, NVDA, BABA, etc.  All those stocks except MSFT have underperformed the S&P 500 over the past 3 months.  The bears have caught the bull and is chomping at its heart.  When you rip the heart out of a bull, it dies.

We finally got an oversold bounce yesterday, much to my relief, but promptly we gave up a large chunk of the gains overnight.  Thanksgiving week is usually a very bullish period of the year, so I am hoping for some holiday cheer to pump up stocks so I can dump my long holdings.  Although I expect the beginnings of a trade deal to be laid out at the G20, so much of that has been leaked that I don't see as big a pop on the news as previously thought.  If the SPX can get back to 2750-2760, I will sell my longs and just wait for a good time to short, hoping it can get to 2800-2820 for a shorting opportunity.  I don't have enough confidence in the buyers for me to try to eek out more of a move on the long side.