Big Money Takes Profit Into Tech Earnings

As the market opened, early signs of a potential downturn emerged. Despite an initial push higher, the S&P 500 futures could not break through the previous session’s highs of 4,035.

As mentioned in a previous Simpler News article, the bearish case was outlined in three parts, and today, each of those began to manifest.

The first indication was the market trading below the Volume Weighted Average Price (VWAP) during the previous session. This is an early sign that sellers may be in control over buyers.

Technology Sector Sells Off

As buying pressure started to decrease, investors began selling major technology stocks. Apple Inc. (AAPL), Tesla Motor Company (TSLA), and Amazon (AMZN) have been among the top performers in the technology sector. With the Dow Jones being weak, as soon as these leaders started to decline, there was nothing to support the market. While money was being taken out, it was not being invested in other technology stocks, indicating that investors were taking profits after the recent rally.

As the market began to decline during the initial trading period, it approached a crucial level of 4,000 on the S&P 500 futures. This level is significant because it is a psychological level. When a level like this is broken, it can influence traders’ emotions, resulting in increased buying or selling.

The market continued to decline throughout the rest of the cash session as no signs of buying emerged. This price action before the release of technology earnings is likely due to big investors positioning themselves for a potentially significant move when Netflix reports on Thursday after the close. The selling before the report does not necessarily mean that investors expect an adverse reaction, but instead, they are taking profits after a strong run by technology stocks.

Economic Catalyst to Watch For

There are a few economic reports along with stock earnings that traders need to be aware of as this week slowly comes to an end. 

Continuing and Initial Jobless Claims will release their data on Thursday at 8:30 a.m. Eastern. As mentioned above, Netflix (NFLX) will release its earnings report after the bell. Netflix is the first big technology name to report, so ripples may be sent through the market. Often, advertisement names can be drastically affected based on their subscription numbers. 

On Friday, the Personal consumption expenditures (PCE) data will be released at 8:30 a.m. Eastern followed by the University of Michigan (Umich) Consumer Sentiment Index data at 10 a.m. Eastern.

Nasdaq Finally Gives in, Market rolls Over

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 1.61%, losing 64 points, while the Nasdaq futures closed down 1.29%, decreasing 149 points. The Dow Jones futures followed, closing down 1.89%, falling 643 points.