Bear market awaits tech stocks, with Tesla at center, if sell-off continues, strategist warns


Stock futures show losses on the last full trading day – though probably a slim one – before the Thanksgiving feast begins. Investors will also be browsing a mountain of data on Wednesday.

The recent stock losses have raised more doubts about a Santa Claus rally, for some. Keep an eye on the yield of the 30-year Treasury TMUBMUSD30Y,
2.013%,
advises Jeffrey Halley, senior market analyst at Oanda.

“Until long-term US yields start to reverse their recent gains, and the author has long believed this is not taken for granted, we shouldn’t expect the strength of the US dollar to end,” nor be excited about the stock markets for the rest of this month and maybe until Christmas, ”he told clients in a note.

Rising yields, as investors know, hurt tech stocks. “If interest rates rise faster than expectations of future growth, then the net effect is negative on present value and even more so for growth stocks because they have a longer duration,” said Peter Garnry, responsible for the actions of Saxo Bank, to customers in a note. to customers on Tuesday.

Garnry provides our call of the day as he uses a bit of recent history to make a grim prediction of what another rise in yields might do to tech stocks.

“We have seen a downward beta (higher sensitivity) in all of our growth equity baskets [on Monday] with the basket of games down 2.3% and the worst performances being the E-commerce and Crypto & Blockchain baskets, down 4.2% and 5.1% respectively. That tells you a lot about sensitivity and given the decline in tech stocks in March, we could easily see a 15-20% drop in tech stocks, ”he said. An asset is generally defined as entering a bear market when it drops at least 20% from its peak.

Garnry said the highs reached earlier this year for the US 10-year yield TMUBMUSD10Y,
1.664%
– a 52-week high of 1.749% was reached on March 31 – are essential for monitoring a “breakout and a new trading environment.”

And popular action could be at the center of it all, he said. “With all of Tesla‘s options business eclipsing the combined options business of the FTSE 100 components, we believe Tesla will be at the center of the next risk-free technological evolution,” he added.

Bloomberg / Saxo Bank


Tesla shares are up 57% year-to-date, although CEO Elon Musk continues to sell. It recently dropped 934,000 more shares for about $ 1.05 billion, bringing its total to $ 9.85 billion since early November.

Read: Cathie Wood’s ARK sold Tesla to buy Zoom after profits

Garnry advises investors to “improve the balance between growth and value stocks,” to offset any potential technology loss.

Have a safe Happy Thanksgiving, and this column will be back on Friday.

The buzz

On the traditional Thanksgiving Eve data dump, weekly initial jobless claims, second estimate of third quarter gross domestic product, October personal income and personal spending, new home sales and preliminary data October on durable goods and basic capital goods are all ahead.

Also, the minutes of the last Federal Reserve meeting will arrive later. Overnight, the Reserve Bank of New Zealand raised its key rate.

Deere shares DE,
+ 0.03%
are up after the construction equipment company reported higher than expected earnings and sales.

The personal computing boom is apparently still going strong, with HP HPQ,
+ 0.81%
and Dell DELL,
-0.83%
stocks go up after each report of strong sales.

On the retail side, the retailer Gap GPS,
-1.80%
advice missed due to ‘significant’ supply chain issues, while Nordstrom JWN,
-1.21%
have reported mixed results. The actions of both crumble.

Longeveron LGVN,
-38.94%,
a little-known biopharma, attracts the attention of the crowd, but they have seen this rodeo before and are wary.

The fifth wave of COVID-19 in France is spreading “at lightning speed”, warn officials of one country among many in Europe that is struggling to control epidemics. On the second Thanksgiving since the start of the pandemic, disease experts are closely monitoring cold spots in the Upper Midwest. And the United States will soon demand that all border workers be vaccinated.

Deutsche Bank, Haver Analytics, Johns Hopkins University. Note: Reflects confirmed cases, which may be affected by different levels of testing in each country.


Sweden elects its very first female prime minister, Magdalena Andersson.

The steps

ES00 futures contracts,
-0.38%

YM00,
-0.43%

NQ00,
-0.46%
are softer, with bond yields TMUBMUSD10Y,
1.664%
hovering at high levels and the dollar DXY,
+ 0.24%
rising. CL00 oil price,

NQ00,
-0.46%
continue to rise after the well-announced exploitation of strategic crude reserves by the United States on Tuesday, as analysts see demand in the driver’s seat. Gold GC00,
+ 0.08%
is also higher. And the Turkish lira USDTRY,
-8.96%
is recovering after a sharp 10% drop this week against the dollar.

Random readings

NASA sends a spacecraft into orbit to strike an asteroid, “Armageddon” style.

A manuscript by Albert Einstein, detailing the great mind at work, sold for $ 11 million at auction.

Inflation buzzkill aside, there just isn’t enough alcohol for Thanksgiving this year.

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