When the futures market opened to big gains on Sunday evening, there were a number of traders saying they planned to fade the open on Monday. Or at the very least, take profits in a number of long positions. Given how many people seemed to be on the fade trade, I thought it was possible that we didn’t get that move in the Nasdaq today.
However, that’s exactly what we got.
The markets still logged solid gains, but we simply came into the open way too hot. Some were caught short or in a risk-off position coming into Monday which drew in initial buyers. But those who were long coming into Monday used the Nasdaq’s early gains of almost 2% as an opportune time to hit the exits, particularly with the S&P 500 hitting new highs.
To be fair, the Nasdaq did press above that 8,100 resistance level we mapped out on Friday. With a last-hour rally, buyers looked like they might recapture the mark. Even though bulls couldn’t muster the strength, investors got off to a good start in the second half of 2019. It will be interesting to see if we run to new highs ahead of earnings, or chop/pullback into the quarterly results later this month.
Click to Enlarge
Winners in the Nasdaq Today
Earnings season will pick back up in a few weeks, but until then, the news cycle may be a bit quiet. Monday’s exception? Huawei.
The Chinese technology company was essentially blacklisted from the U.S., with American firms banned from shipping components to the company. Huawei has been suffering a massive financial burden due to trade war, but others have felt the pain too.
Specifically, Broadcom (NASDAQ:AVGO), Micron (NASDAQ:MU) and Qualcomm (NASDAQ:QCOM) have all been struggling as a result. Many were expecting a trade truce between President Trump and President Xi this weekend and that’s exactly what we got. Not many thought Trump would lift the ban on supplies to Huawei though.
That gave a big boost to these companies and deservedly so — they were suffering notable losses as a result of this lost business. MU logged 4% gains (and here’s how to trade it, by the way) as did AVGO. Qualcomm gave up most of its gains, but still notched 1.9% in gains on the day.
For the most part, chips and semi stocks did well on the day.
Also no surprise is that Chinese stocks did pretty well on Monday. Alibaba (NYSE:BABA) jumped 3.3%, JD.com (NASDAQ:JD) climbed 3% and Baozun (NASDAQ:BZUN) ripped 7.5%. Huya (NYSE:HUYA), Baidu (NASDAQ:BIDU) and even Nio (NASDAQ:NIO) climbed on the day as well.
You can tell these stocks are itching to rip if and when we get a trade deal.
Large cap tech also did well. MAANG — Microsoft (NASDAQ:MSFT) Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) — all logged nice gains on the day too. And no, that wasn’t a typo with the “F” from FANG. Let’s use it to transition to the next group…
Losers in the Nasdaq Today
Facebook (NASDAQ:FB) ended flat on the day, which is pitiful in the face of an otherwise solid day for its peers. It joins other large cap tech stocks like Intel (NASDAQ:INTC) and Cisco Systems (NASDAQ:CSCO), which also majorly underperformed on the day.
InvestorPlace readers shouldn’t be surprised by the weakness in INTC or CSCO though, given that it was emphasized last week.
While Snap (NYSE:SNAP) and Twitter (NYSE:TWTR) had good days, Pinterest (NYSE:PINS) did not, falling about 2%. While other recent IPOs have done well, this one continues to struggle when it comes to finding any upside momentum.
Uber (NYSE:UBER), another recent IPO, finally looked like it was breaking on Friday. In fact, it did breakout. But closing below $45 does not bode well for short-term bulls. If it can reclaim the $45 IPO price, perhaps it can make a run to its current highs near $47. Otherwise, investors should wait on Uber.
Zoom Video (NASDAQ:ZM) took a tumble on Monday, falling almost 3% after it was downgraded by analysts at Goldman Sachs. They cut the stock from neutral to sell and assigned a $66 price target. Even after Monday’s decline, it still implies over 20% downside.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long
