S&P 500 analysis: AAPL, TSLA breakdown puts techs into focus

S&P 500 analysis – will more tech stocks break lower?
AAPL, TSLA among tech stocks breaking lower
S&P 500 Technical analysis: Bears still need more confirmation

The US stock markets spent the first half of the session in the positive territory, stabilising after Friday’s sell-off. But with sentiment shaken, there is a risk we could witness a similar pattern and see the gains evaporate later on in the session.

S&P 500 analysis – will more tech stocks break lower?

Along with slowing sales growth, you also have rising bond yields making growth stocks less appealing, as ‘risk-free’ rates are offering a decent return right now. On top of all this, don’t forget the impact of profit-taking among reasons why stocks have struggled. After a strong performance so far in the year, many investors would be looking for excuses to bank some profit. While the slump in Apple and Tesla shares have weighed heavily on the Nasdaq, the S&P 500 was showing a similar picture, printing some bearish-looking price action last week. So, the calmness we have witnessed so far in the day may not last long.

Earlier, my colleague Matt Weller wrote about the underperformance of the US tech sector of late, owing to the slowdown in sales growth. More HERE.

Shares in Apple closed 7% lower last week, with Tesla also struggling. Both stocks have started the new week on the backfoot, although the major indices have advanced.

Here’s how AAPL chart looked like earlier:

And here’s how the chart of TSLA looked like:

S&P 500 analysis: Technical analysis

On Friday, the S&P gave up its earlier gains to turn lower, closing below the 21-day moving average and prior support around 4505 area.

Today, the stock market bulls must be relieved that despite Friday’s sharp reversal, there has been no downside follow through. However, like we saw on Friday, things could unravel quickly. There are still a few hours to go until the closing bell.

If by the close of play the markets are still holding onto their gains, then this would be a bullish technical development heading into Tuesday’s session.

However, another bearish close is what we are wary of. If that were to happen, then look out below. As more investors rush for the exits, this will exacerbate the selling.

With a bullish trend line already broken, the short-term path of least resistance is to the downside. But we will stop short of calling this the top. The strong bullish trend has to weaken first before most traders would even entertain the idea of shorting the markets.

Source for all charts used in this article: TradingView.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Contracts for Difference (CFDs) are not available to US residents.

FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of StoneX Group Inc.

Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.

Know your advisor