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Investors mostly paused their buying spree today as the Dow snapped its six-day winning streak. Concerns that the recent rally is overbought could be valid, but tech stocks couldn't be stopped today.
The Nasdaq touched 10,000 for the first time in intraday trading and closed 0.3% higher. But the S&P 500 closed 0.8% lower, and the Dow fell 1.1%.
Here's what our experts – Chris Johnson, Tom Gentile, D.R. Barton, Jr., and Shah Gilani – saw live at the open and close of the trading day…
- Chris thinks U.S. equity futures and European stocks fell last night and this morning on worries that the blistering rally in risk assets has overshot the economic recovery.
- After a record-breaking rally that added $21 trillion to global stock markets, valuations now look stretched, and technical indicators suggest a pullback is overdue.
- Ninety-seven percent of S&P 500 stocks are trading above their respective 50-day moving averages, which signals we're in overbought territory.
- Expect to see some selling start to enter the market.
- The selling may "snowball" as fear of a pullback has been building among the "smart money" since this rally seems to be driven, in part, by retail investors.
- Chris expects a 7% to 10% "pause" that takes the S&P 500 to 3,000.
- Chris thinks several energy companies are also in overbought territory and thinks investors should:
- Put stop-loss orders in on all oil-related positions.
- Look for a retracement to $35 on Brent.
- Use inverse ETFs or out-of-the-money put options to profit off the decline.
- Reenter the market using only limit-buy orders.
- Shah spent most of his livestream answering viewers' individual stock pick questions.
- He likes Penn National Gaming Inc. (NASDAQ: PENN), currently trading for $32.50, but recommends investors keep a tight stop loss order on the pick.
- If it doesn't hold $30, it could break significantly lower.
- Shah thinks Nikola Corp. (NASDAQ: NKLA) is interesting, but he doesn't understand how it's worth as much as Ford Motor Co. (NYSE: F) with limited sales history and known facts about the company.
- This stock is up 300% in the last month, and there's no telling what it could do next. Do further research before betting one way or the other.
Catch us tomorrow – starting LIVE again at 8:45 a.m. EDT with Chris Johnson, right here.
If you missed our live streams today, you can now replay them on our YouTube channel, here.
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