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Tech Takes Another Big Bite Out of the Market

Volume was rather light on Monday as you would expect in the sessions before Thanksgiving, but that didn’t keep the market from leading off a second straight week with a sharp selloff.

The main problem today was tech. Specifically, news reports stated that Apple cut production orders for three iPhone models that were recently released. Shares dipped nearly 4% in the session, continuing last week’s rough performance for this influential company.

As goes Apple, so goes the market…especially tech. Most of the other FANGs had even worse performances. Facebook plunged 5.72%, Netflix dropped 5.45%, Amazon was off 5.09% and Alphabet dipped 3.91%.

Given all this red, there was no place for the NASDAQ to go but down… by a lot. The index dropped 3.03% (or about 219 points) to 7028.48. That’s more than it was down all of last week.

Its counterparts fared better, but that’s not saying much during a pullback like this one. The S&P declined 1.66% to 2690.73 and the Dow dropped 1.56% (or nearly 400 points) to 25,017.44. At least the indices came off their lows by the close.

While tech is more than enough to trip up the market, it wasn’t the only thing having an impact today. When last we left you on the trade issue, President Trump was sounding more optimistic that a deal could be reached with China at or around the G-20 meeting in Argentina, which is less than two weeks away.

But over the weekend, Vice President Mike Pence was talking tough on trade at an APEC meeting in Papua New Guinea. The market won’t be able to truly relax when it comes to trade until there is an actual deal or some kind of truce, but it still loves to hear encouraging vibes from the two sides. So the latest brouhaha has increased pessimism heading into the G-20. Maybe lowered expectations will end up being a good thing.

The Wednesday and Friday sessions this week will probably be pretty quiet as investors take some extra time during Thanksgiving. That leaves Tuesday as the most likely time for another significant move in one direction or another. Let’s hope we can get at least some of today’s losses back. Fingers crossed…

Today's Portfolio Highlights:

Counterstrike: Just when you start thinking we may be out of the woods, the market kicks you in the gut again. Stocks started another week with a steep selloff thanks to Apple and trade. Jeremy wants more protection for the portfolio, so he added a small 3% position in IPATH S&P 500 VIX Short-Term Futures ETN (VXX). Read more in the full write-up.

TAZR Trader: Well, the selloff to start this week really puts a November rally in doubt. Kevin had been short-term bullish but stressed the importance of being agile at such a turbulent time. Today, he showed how its done. The editor got out of a couple bullish positions and moved into 10% allocations each for ProShares UltraPro Short QQQ ETF (SQQQ) and ProShares UltraPro Short Dow30 ETF (SDOW). These short leveraged trades are only for aggressive traders who might have to get out of these positions at a moment’s notice if the 2680-2650 zone holds. Read the complete commentary for more on this “Plan B” and Kevin’s overall market analysis.

Black Box Trader: This week's adjustment included four swaps. The stocks that left the portfolio today included:

• Kohl's (KSS)
• Molina Healthcare (MOH)
• Target (TGT)
• Nordstrom (JWN)

The new buys that replaced these names are:

• HCA Healthcare (HCA)
• Oshkosh (OSK)
• Spirit Airlines (SAVE)
• Hertz Global Holdings (HTZ)

Read the Black Box Trader's Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Zacks Confidential: Is the market correction the end of the bull market or just a break? That’s the question on everybody’s mind right now, including Kevin Matras. He decided to hand the reins of the Zacks Confidential over to Kevin Cook because the “Cooker” always has his ear to the ground when it comes what the institutional fund managers are saying and doing. Read his detailed article and get four diverse stocks that can be bought on pullbacks: Hunting the Bear: Will the Market Rhyme with 2015-16?

Options Trader:
"Trading should be lighter this week given the shortened holiday (Thanksgiving) trading week.

"But that could easily exacerbate what the market does in either direction.

"Traders will be eying the lows we saw last week in the Dow and the S&P to see if they hold (even though the tech-heavy Nasdaq already took them out). If they hold, a rally is likely to develop. If those give way, the next level of support comes in at the pullback’s October 29th lows."
-- Kevin Matras

All the Best,
Jim Giaquinto

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