Happy Sunday. QQQs -3.3% this week as Semis -5% and ARKK -6% led the way down. Only a couple weeks in and 2025 already feels decidedly different than the investing environment we had in 2024, especially the frothy momentum driven market of November and December — non-profitable tech was down 7% this week.
Our market/macro view since late summer has generally been that we thought the “market would be upward trending but somewhat choppy.” That generally has played out and we haven’t had to spend too much time on the macro in our weekly’s. However, on Tuesday we wrote we were shifting to a more neutral view…here’s what we wrote:
Readers who have been a here a while know that I like to look at individual price action in names as tea leaves for where the broader market is going. One question we like to ask is: Are stocks going up/down on good/bad news? Are moves outsized in one direction? We view morning news items as mini-earnings and reactions to those items are important as a barometer for where the market wants to head near-term. Other things we look at: are stocks holding onto earnings gaps or following through; are stocks hitting new highs then falling below those highs, etc. We also like to look at market leaders for potential shifts in momentum.
With that being said, there are an increasing amount of worrisome tea leaves for us that are influencing our near-term view on the market. A few I have seen in recent days:
The leaders of the mo rally post Trump election are now rolling over. Take a look at TSLA, APP, PLTR — 3 of the most impt mo leaders - which are now below ST moving averages. TSLA broke above all time highs and now is decidedly below that. Whereas we saw outsized moves in the positive direction in late 2024, now we are seeing things like APP -7% on BAML’s call out this morning. And PLTR now down 10%+ following MS neg note yesterday. These stocks were like teflon from Nov through late Dec and that shine has worn off, which is likely a sign animal spirits are cooling
SW price action is horrendous. CRM has failed to hold the earnings gap. TEAM and SNOW were down 3% on upgrades this morning. MDB and ADBE are following through to the downside afer misses. Leaders like NOW are failing at ST moving average resistance. No bueno
NFLX has failed to rally on several pieces of good news starting in late dec: positive 3p data; good xmas/squid game numbers and a great golden globe showing.
NVDA is one important one I’m watching and one could argue px action today was outsized to the downside on sell the news. In terms of short-term for the market, I really want to see it hold the 10d at $140, which was also the previous high in June. If it does, would get me more comfortable things will stabilize
AAPL is another stock that had been like Teflon but now is finally going down on neg checks/neg news.
BTC - a good measure of risk appetite - has now failed at $100k twice and is sitting right at 10d/20d. COIN and MSTR - both leaders in the crypto rally - are exhibiting worrisome px action. COIN is now below previous highs in march after breaking above in Nov. MSTR is dn 35% from highs.
AVGO price action to start the year…
AMZN lower highs; GOOGL/META double tops with RSI neg divergence…travel names rolling over to start year
Since then, a few things to add:
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