A bear market is waiting for technology stocks, with Tesla at the center, if this sale continues, warns strategist

Stock futures point to some losses on the last full trading day – albeit probably a thin one – before the Thanksgiving party begins. Investors will also wade through a mountain of data on Wednesday.

Recent stock losses have raised more doubts about a Santa Claus meeting for some. Keep an eye on the 30-year government interest rate TMUBMUSD30Y,
2.014%,
advises Jeffrey Halley, senior market analyst at Oanda.

“Until long-term US interest rates begin to reverse their recent rises, and the author has long felt that it is not a given, we should not expect an end to the strength of the US Dollar, nor should we be excited about the stock markets for the rest of this month and possibly into Christmas, ”he told customers in a note.

Rising interest rates, as investors know, are painful for technology stocks. “If interest rates rise faster than future growth expectations, then the net effect is negative on the present value and more for growth stocks, as they have a longer duration,” Saxo Bank’s CEO Peter Garnry explained to customers in a note. to customers on Tuesday.

Garnry gives ours today’s call as he uses a bit of recent history to make a grim forecast of what a renewed rise in interest rates could do to technology stocks.

“We saw downside beta (higher sensitivity) in all our growth stock curves [on Monday] with the gaming curve a decline of 2.3% and the worst results are the e-commerce and crypto and blockchain curves, a decline of 4.2% and 5.1% respectively. “This tells you a lot about sensitivity, and given the decline in technology stocks back in March, we could easily see a 15% to 20% drop in technology stocks,” he said. An asset is commonly defined as entering a bear market when it falls with at least 20% from its peak.

Garnry said that peaks reached earlier this year for the US 10-year rate TMUBMUSD10Y,
1.661%
– a 52-week high of 1.749% was reached on 31 March – is the key to keeping an eye on an “outbreak and a new trading environment.

And a popular stock could be at the center of this, he said. “With all the options activity in Tesla dwarfs the combined option activity in FTSE 100 components, we believe Tesla will be at the center of the next risk-off move in technology,” he added.

Bloomberg / Saxo Bank

Tesla shares up 57% year-to-date, even as CEO Elon Musk continues to sell. He recently dumped another 934,000 shares for about $ 1.05 billion, bringing his total to $ 9.85 billion since early November.

Read: Cathie Woods ARK sold Tesla to buy Zoom after earnings

Garnry advises investors to “improve the balance between growth and value stocks” to offset any potential technological losses.

Have a safe and happy Thanksgiving and this column returns on Friday.

Sum

On the traditional day-before-Thanksgiving data dump are weekly first unemployment applications, the second estimate for Q3 gross domestic product, October personal income and personal consumption, sales of new homes and the preliminary data for orders for durable goods and core capital goods from October. all ahead.

The minutes from the most recent meeting of the Federal Reserve will also come later. During the night, the Reserve Bank of New Zealand raised its cash rate.

Deere shares DE,
+0.03%
increases after the construction equipment company reported profits and sales above expectations.

The personal computer boom is apparently still going on, with HP HPQ,
+0.81%
and Dell DELL,
-0.83%
the shares rise after each reported strong sale.

On the retail front, Gap sells GPS,
-1.80%
lacked guidance due to “significant” supply chain problems, while Nordstrom JWN,
-1.21%
reported mixed results. Both shares tumble.

Longeveron LGVN,
-38.94%,
a little known biopharma, attracts the attention of short-pressed audiences, but they have seen this rodeo before and are on guard.

France’s fifth COVID-19 wave is spreading “lightning fast”, warn officials from a country of many in Europe struggling to get outbreaks under control. In the second Thanksgiving since the pandemic began, disease experts are keeping a close eye on hot spots in the cool Upper Midwest. And the United States will soon demand that all border crossings be vaccinated.

Deutsche Bank, Haver Analytics, Johns Hopkins University. Note: Reflects confirmed cases that may be affected by different levels of testing in each country.

Sweden elects its first ever female Prime Minister, Magdalena Andersson.

The markets

Stock futures ES00,
-0.32%

YM00,
-0.36%

NQ00,
-0.41%
is softer, with bond yields TMUBMUSD10Y,
1.661%
hovering at elevated levels and the dollar DXY,
+0.26%
increasing. Oil prices CL00,
+0.10%

NQ00,
-0.41%
continues to rise after Tuesday’s well-telegraphed U.S. exploitation of strategic crude oil reserves as analysts see demand in the driver’s seat. Gold GC00,
+0.18%
is also higher. And the Turkish lira USDTRY,
-5.10%
is on its way back after a brutal fall of 10% this week against the dollar.

Random readings

NASA sends spacecraft into orbit to smash into an asteroid, “Armageddon” -style.

An Albert Einstein manuscript describing the great mind at work over one of his greatest scientific breakthroughs was sold for $ 11 million at auction.

Aside from the inflation buzzkill, there just isn’t enough booze for Thanksgiving this year.

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