Investors have had their eyes on stocks and the bond market so much today that the performance of one important asset class may have slipped right by their attention.
Bitcoin ($BTCUSD) prices dipped more than 15% to their intraday lows on Monday, sending a message that is likely to continue rippling through the stock market. That message is that the “risk on” trade may have just officially died.
While Bitcoin has been classified as a safe store of value by some long-term investors, the asset class is clearly more appropriately referred to as a speculative security, much like the small cap stock universe represented by the Russell 2000.
For that reason, a shift to extreme selling in Bitcoin often tied to additional volatility in the market as it is a sign that speculation among investors is dropping.
From a technical perspective, Bitcoin posted impressive support at the $50,000 price. This price serves as obvious round-numbered support. That support comes with a heavy burden as a break below $50,000 will increase short-term selling on the cryptocurrency, forcing a target price of $40,000.
The last two times Bitcoin saw the $50,000 price level break was in 2021 and 2022, both times resulting in fast and aggressive declines to $40,000 and lower.
Apple (AAPL) shares were the worst performing stock in the Nasdaq 100 after the stock closed almost 5% lower than Friday’s close.
The selloff was sparked by the report that Warren Buffett's Berkshire Hathaway had sold more than half of its position in the technology leader. The news came from Berkshire Hathaway’s quarterly earnings report that dropped over the weekend.
Last week, Apple shares tried to climb back above the $220 price level after the companies less than impressive earnings report. Investors had rallied the shares more than 4% higher ahead of the earnings report, hoping that the iPhone manufacturer would spark a return to its recent highs.
The combination of lackluster earnings and Berkshire’s disclosure resulted in the stock breaking below its 50-day moving average. Apple started the day as the only Magnificent Seven that remained above that critical trendline. Today, none remain.
Apple shares did find support at the $200 level in early morning trading. This round-numbered price served as a bullish breakout price for the stock in June and should provide additional support over the next week.
Beyond $200, Apple stock should find additional support at its longer-term 200-day moving average. That price currently sits at $190.
Apple remains a long-term buy, with a target price of $250.
NVIDIA (NVDA) shares traded almost five times the volume of Apple stock Monday as shares of the AI chip leader dropped more than 6% at the close.
The stock took a beating from investors for two reasons.
First, the obvious routing of the Nasdaq 100 Index, of which NVIDIA accounts for more than 7% of the overall index weighting. For this reason, massive selling in the technology sector will take a toll on leadership names like NVIDIA.
Second, headlines point to a delay in the much-awaited Blackwell chips that may have a ripple effect through the technology industry. (Reuters report)
While analysts have been fast to respond to the delay as being limited in scope and not something that is likely to move the needle for NVIDIA, the news is another sign that expectations in the AI space, specifically for NVIDIA, may have been running too hot for too long.
The headlines also add pressure to NVIDIA’s earnings report, which is due to be released on August 28, after the market close.
As it stands now, it could be easily argued that NVIDIA’s earnings report could be the last bullish catalyst for the market ahead of what is normally a hard month for the markets in September.
Shares of NVIDIA closed just above $100 in a sign that the bulls aren’t ready to stop defending their outlook on the stock. Early trading dipped shares as low as $90.69, but that selling was quickly matched by overwhelming buying interest that buoyed shares above the critical $100 price.
A break back below $100 extends the risk that NVIDIA will encounter another wave of selling that threatens to push the stock as low as $80 before the company's quarterly earnings report later this month.
Check here for details on how to potentially maximize NVIDIA’s downside risk.
