GROWTH STOCKS… Crashing?! NDX, XLK, SPX Market Analysis

By Bennett Tindle May 12, 2021

Last Friday the S&P 500 closed into a new, fresh record high. Meanwhile, technology and high-multiple growth stocks remained mostly sideways, if not lower. At the same time, my upside retracement in bonds appeared to coincide with a completed corrective pullback in yields… Needless to say, I came away cautious. Add to that the recent uptick in inflation (albeit mostly on the supply side for now), and you have the perfect storm for further selling pressure in growth stocks and sectors. Today CPI data once again stoked inflation fears among investors, sending the Nasdaq 100 down an additional 2.63%. The question is, and always has been, is this move truly transitory in nature such as J. Powell and the fed is leading us to believe, or are we going to see a more sustainable and prolonged trend. If the ladder is true, we may very well have just printed a significant market top in the charts of the NDX (Nasdaq 100) and XLK (SPDR Technology ETF). As it stands now the trend is still hazy, as the recent rally into a new high for the Nasdaq 100 appears to have completed in 3 waves. As we know, 3 waves does not a trend make, or break. For now I continue to operate under the primary interpretation which gives us one additional price extreme prior to that market top taking shape, but will not hesitate to act on the cautionary tale in the making should validation be achieved.

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