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Tech sell-off has investors looking for buying opportunities: Strategist

JJ Kinahan, TD Ameritrade Chief Market Strategist joins the On the Move panel to discuss today's market action.

Video Transcript

JULIE HYMAN: Let us broaden it out now, broaden it out to tech stocks. Sabina was just talking about tech stocks don't only go up and to the right. Today is an example of that beyond just Stitch Fix, we are seeing that with the large cap tech stocks.

JJ Kinahan is watching that as well. He is joining us now. He's T.D. Ameritrade Chief Market Strategist. He's joining us from Chicago. JJ, it's always good to see you. We are indeed seeing tech stocks sell off today. And I wanted to ask you about this story about the Department of Justice introducing new legislation which is putting some new curbs and limits around Section 230, which affects some of these large tech stocks like a Facebook, for example. Is that anything of a catalyst for these tech shares or is it just sort of more of the same that we're seeing a bit of a rollover?

JJ KINAHAN: I think it's a little bit more of the same, to be honest with you, Julie. Especially as we head into the election season, you would expect maybe a little bit more news like these types of stories starting to hit them. Very interesting overall though if you look at from where those stocks were at their highs down, you're getting some of these stocks down 20%, 17%. Apple was down almost 20%, Facebook down almost 17%.

And so I think we're also coming to an area where people are starting to say, boy, has this been overdone overall in these technology stocks? They're not going away, we've seen the incredible use. So it's kind of interesting seeing our clients starting to nibble at them over the last few days quite a bit also because of the sell off that's taken place recently in there.

ADAM SHAPIRO: Hey, JJ, I want to pick up on this overdone concept, because I'm looking at our website, YahooFinance.com, we've got an article that says Americans are hoarding trillions of dollars in cash. And I keep reading these articles about people are just waiting until after the election to decide what to do. But hasn't the market pretty much priced in regardless who's going to win. I mean, shouldn't this money be deployed now as opposed to waiting?

JJ KINAHAN: Well, it is interesting, Adam. I think it's so funny because we just got done reading all these stories about how retail traders are all in and doing all this stuff the last few months. And then it's the last couple of weeks it's been more, oh, people are waiting, people are waiting.

The things that I don't think are fully priced in to be honest with you, Adam, is going to be tax policy. And I think that that is what has people a little bit perhaps nervous going forward and the other one being health care. But as far as technology in general, there's still going to be a demand for these products no matter who's in office.

We've seen how they've been able to really do so well, especially compared to other industries overall. They've picked up market share and they've picked it up in things that are going to last, like cloud services, the Salesforces of the world, et cetera. People using these products that they're not going to drop when they go back for work.

Now I do think if you're in health care right now, perhaps you have to be a little bit more careful, because there could be some policy changes there. But I don't know that those policies will necessarily change right after the election, as much as next year when you get a new Congress.

JULIE HYMAN: JJ, I want to ask you also more broadly in the market and you pointed out in your note to us, tech stocks are not the whole market, right? Of course not. But the rest of the market isn't doing too great either. Particularly when you look at financial shares and how they've been performing recently. There was that finding about money laundering among some of the big banks that didn't help matters. So if tech stocks aren't doing well can you really, where do you rotate to if you're selling out of tech?

JJ KINAHAN: Well, that has been, financials I think, Julia, has been the biggest worry overall because they do continue to hang in there though in an amazing way taking-- I always compared them to a boxer who just takes punch, after punch, after punch, and won't go down and that's really what the financial shares have been.

Now with that, I do still think that consumer discretionary overall, there is some pent up demand there, if people start to slowly go back to work, et cetera, many of those types of businesses have an opportunity to continue to do well. So I think anything around the consumer, because people have been ordering at home. Obviously Amazon has been the big dog there. But I do think that you'll have an opportunity to see other retail do well once people feel secure.

Now the problem with that being when is this going to be? I think every time we get a little bit of confidence that we're going to go back to work, we see something like what just went on in Europe, where they start to put the clamps back down. Or we have different states, and we know Wisconsin today put the clamps back down on people, et cetera.

So the problem I think many are running into and back to Adam's question, I think that that's what it really relates to, is people who have sold things, taken profits, aren't sure where to go right now because not only the election, but COVID, and although many had hopes they were going back to work September 1st, now maybe they're looking at January and even that, they might be looking now at March. So that's the most difficult part of this.

JULIE HYMAN: JJ, thank you. Maybe some of them are going into IPOs. We're going to talk to a couple of them today. There's some increases. Talk to you soon. JJ Kinahan, T.D. Ameritrade--

JJ KINAHAN: Thanks for having me, guys.

ADAM SHAPIRO: Chief Market Strategist. Thank you.