U.S. equities are rebounding on Monday, continuing the lift off of the S&P 500’s 200-day moving average hit on Friday.
The rally is a welcome relief for investors, who within the week prior contended with one of the most chaotic corrections in market history — coming after such a long and pronounced period of calm — along with the largest one-day point loss in the history of the Dow Jones Industrial Average.
But the catalysts for the selloff remain in play: Higher inflation spurring higher bond yields and strengthening the Federal Reserve’s newly hawkish stance. Thus, I am looking for a test and violation of last week’s lows. A more durable bottom will only be established once new Federal Reserve chairman Jerome Powell announces his commitment to protecting stock prices.
As a result, I am looking for nasty pullbacks in these five popular “new” tech stocks:
Tech Stocks in Trouble: Square (SQ)
Square Inc (NYSE:SQ) shares are vulnerable to an uptrend breakdown here as shares fall below a declining 50-day moving average after hitting double-top resistance below the $50-a-share level. Shares are up more than 344% from the lows hit in the summer of 2016 and they haven’t suffered the indignity of a close below its 20-week moving average.
A close below $39 will do the trick now ahead of what is likely to be a test of the 50-week moving average for a loss of 25% from current levels. The company will next report results on Feb. 27, after the close. Analysts are looking for earnings of 7-cents-per-share on revenues of $601.75 million. When the company last reported on Nov. 8, earnings of 7-cents-per-share beat estimates by 2 cents on revenues growth of 44.6%.
Tech Stocks in Trouble: Groupon (GRPN)
Groupon Inc (NASDAQ:GRPN) shares are threatening to fall below critical support at the $5-a-share level after hitting resistance near the $6 level. Shares more than doubled off of their June low thanks to a turnaround in user metrics. But the stock looks vulnerable to bout of profit taking as the business model of social discounts continues to face significant competitive headwinds.
GRPN will next report results on Feb. 14, before the bell. Analysts are looking for earnings of 9-cents-per-share on revenues of $860.58 million. The company last reported on Nov. 1, with earnings of 1-cent-per-share surprising by a penny despite a 7.6% decline in revenue.
Tech Stocks in Trouble: Tesla (TSLA)
Amid ongoing disappointment with the roll-out of the Model 3, Tesla Inc (NASDAQ:TSLA) shares have been dribbling lower since double-topping last summer near the $390-a-share threshold. Shares have since lost as much as 25% and they have fallen below their 50-week moving average in what looks like a prelude to a drop to its 200-week moving average. This level was last touched in late 2016.
The company will next report results on May 9, after the close, with analysts looking for a loss of $3.16-per-share (amid a deepening cash burn rate) on revenues of $3.6 billion. When the company last reported on Feb. 7, a loss of $3.04-per-share beat estimates by 11 cents on a 43.9% rise in revenues.
Tech Stocks in Trouble: Stitch Fix (SFIX)
Recent fashion box IPO Stitch Fix Inc (NASDAQ:SFIX) has seen shares lose a third from their late-December high; posting a nice double from the post-IPO low of $15. But a retest of those November lows looks likely now amid competitive pressures on its business model from the likes of Amazon.com, Inc. (NASDAQ:AMZN) and a questionable ability to maintain recent top-line growth.
The company will next report results on March 19. Analysts are looking for earnings of 6-cents-per-share on revenues of $291.3 million. When the company last reported on Dec. 19, earnings of 4-cents-per-share beat estimates by 1 cent on a 25.3% rise in revenues.
Tech Stocks in Trouble: Roku (ROKU)
Roku Inc (NASDAQ:ROKU) enjoyed a post-IPO surge last November, resulting in a near 3x gain from the lows. But prices have since dribbled lower, rising a breakdown out of its multi-month support range amid a questionable future for external smart TV boxes as manufacturers increasingly integrate streaming capability into new display sets.
The company will next report results on Feb. 21. Analysts are looking for a loss of 11-cents-per-share on revenues of $182.5 million. When the company last reported Nov. 8, a loss of 10-cents-per-share beat estimates by 19 cents on a 40.1% 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.
