Stocks are rolling over in mid-day trading on Wednesday after the Federal Reserve announced it would begin “quantitative tightening” in October. This begins the process, as expected, of rolling back the Fed’s bloated $4.4 trillion balance sheet. Moreover, policymakers firmed up their expectation of another interest rate hike in December.
The result is that the two-year Treasury yield has returned to levels not seen since 2008, a reminder that monetary policy is well and truly exiting the crisis-era obsession with ultra-low rates.
Adding to the headwinds for the stock bulls is the weakness in Apple Inc. (NASDAQ:AAPL) shares after tepid iPhone 8 reviews, weak preorders and reports of Apple Watch Series 3 cellular connectivity issues weigh.
As a result, the Nasdaq 100 — which is in the midst of a two-month consolidation range near its late July highs — is rolling back over in an apparent setup to test its 50-day moving average.
Here are four big-tech stocks that are tipping over:
Tech Stocks: Apple (AAPL)
Apple Inc. shares have sliced back below its 50-day moving average, threatening to break below its two-month trading range. This could set up a decline to the 200-day average, below the June/July lows, as sentiment is hit by a combination of factors.
The iPhone 8 is open for pre-orders, but unimpressive reviews (same form factor as 2014’s iPhone 6) is resulting in a tepid response from consumers (many of which are waiting for the iPhone X in November).
There are also reports of spotty LTE cellular connectivity with the new Series 3 Apple Watch. All of this, along with expectations of tight iPhone X supply, suggests overall sales could be muted this quarter and next compared to the iPhone 6 supercycle.
The company will next report results on Oct. 24 after the close. Analysts are looking for earnings of $1.88 per share on revenues of $50.9 billion.
Tech Stocks: Amazon (AMZN)
Amazon.com, Inc. (NASDAQ:AMZN) shares are drifting further below their 50-day moving average after trying, and failing, to climb back above the $1,000-a-share level.
This completes what looks to be a messy head-and-shoulders reversal pattern as measured from a “left shoulder” in June — a pattern that could trace to a decline to $825 for a loss of roughly 15% from current levels.
The company will next report results on October 26 after the close. Analysts are looking for a loss of five cents per share on revenues of $42.1 billion.
When the company last reported results, earnings of 40 cents per share missed estimates by 99 cents on a 24.8% rise in revenues.
Tech Stocks: Tesla (TSLA)
Tesla Inc (NASDAQ:TSLA) shares are bumping up against resistance from its late June highs, stalling the 25%+ rally out of the early July lows, amid intensifying competitive pressure (BMW set to launch new EV sedan, for instance) and nagging doubts about Model 3 execution.
Analysts at Jefferies initiated coverage with an underperform rating for these reasons as well as a belief market expectations have gone too far.
The company will next report results on Oct. 25 after the close. Analysts are looking for a loss of $2.10 per share on revenues of $2.9 billion as the cash burn associated with the Model 3 production ramp-up continues.
When the company last reported on Aug. 2, a loss of 1.33 per share beat estimates by 59 cents on a 119.6% rise in revenues.
Tech Stocks: Broadcom (AVGO)
Broadcom Ltd (NASDAQ:AVGO) shares are under heavy pressure in mid-day trading on Wednesday as concerns over iPhone 8 preorders hits AAPL supplier stocks.Shares had rallied strongly since January, up some 50%, on hopes for its wireless charging technology that Apple is looking to make ubiquitous across its new products.
Shares had rallied strongly since January, up some 50%, on hopes for its wireless charging technology that Apple is looking to make ubiquitous across its new products.
The company will next report results on Dec. 7 after the bell. Analysts are looking for earnings of $4.46 per share on revenues of $4.8 billion. When the company last reported on Aug. 24, earnings of $4.10 per share beat estimates by seven cents on a 17.5% rise in revenues.
The company will next report results on Dec. 7 after the bell. Analysts are looking for earnings of $4.46 per share on revenues of $4.8 billion. When the company last reported on Aug. 24, earnings of $4.10 per share beat estimates by seven cents on a 17.5% rise in revenues.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
