Momentum Stocks Look Weak; Nvidia & Tesla Crater

Momentum – Stocks End The Week On A Positive Note

Momentum – This week continued the streak of avoiding a 1% daily move in the S&P 500. However, it was a relatively topsy-turvy week for stocks as there were two pullbacks. The week ended up nicely since stocks were up on Friday. The S&P 500 increased 0.33% and the VIX fell 6.02% to 12.64. The S&P 500 was up 0.59% on the week and is up 6.6% year to date.

It is now less than 1% away from its record high. The CNN Fear and Greed index is at 54 which means the S&P 500 can easily break its record high without getting too overbought.

We got more confirmation that the consumer is doing well as Nordstrom reported great earnings. It had same-store sales growth of 4%. They were only expected to increase by 0.8%. Same-store sales guidance expects an increase of 2% in 2018. This is above the initial estimate between 0.5% and 1.5%. Even with the 13.11% increase in Nordstrom stock, the consumer discretionary sector only went up 0.12%.

Since all sectors were positive, it was the worst performing one. The best was real estate which was up 0.96%.

Momentum Is Toast: Facebook Is In A Bear Market

The momentum leaders haven’t been doing well lately, but the S&P 500 is still near its record, partially because of the rally in financials. Facebook has been doing terribly as it is down 6.4% since August 6th.

The fact that Snapchat lost users isn’t important because investors aren’t concerned with competition. Facebook has a huge moat because it has a ton of users who won’t leave because of the strong network effect.

The reason it’s down is because of the increased costs associated with moderating the website. The stock might not be able to increase again until it reports next quarter’s earnings and gets into more detail about how much costs will rise.

Momentum – Netflix Adding Advertising?

Netflix stock is down 24% since July 9th. You wouldn’t think that one quarter missing subscriber numbers would matter because there have been a few down quarters throughout this massive growth run.