Trade, Tech Drive Wild Week on Wall Street

Tesla is headed toward its best week in two years

Apr 6, 2018 at 2:03 PM
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Trade and tech dominated headlines this week, so much so that Friday's big March jobs miss was just a blip on Wall Street's radar. Volatility ramped up, too, as Washington and Beijing exchanged tariff jabs, sending stocks with exposure to China -- including automakers, food processors, and fertilizer firms -- on a roller-coaster ride.

More broadly, the Dow has explored 1,277-point intraday trading range as of this writing, and the Cboe Volatility Index (VIX) jumped as high as 25.72 (on Monday) and as low as 18.57 (on Thursday). The price action appears set to resolve to the downside, though, with the Dow, Nasdaq Composite (IXIC), and S&P 500 Index (SPX) all set to close the week in the red -- though the latter is back above its key 200-day moving average.

Trump Continues Twitter Attack on Amazon

FAANG stocks continued to be in focus, though Facebook (FB) shares found a key foothold as the fallout surrounding the social media giant's data breach escalated ahead of CEO Mark Zuckerberg's congressional testimony next week. Amazon (AMZN) also stabilized above technical support -- though its Chinese counterpart Alibaba (BABA) can't say the same -- even as President Donald Trump escalated his Twitter attacks on the e-tailer. On the other hand, Citron Research pegged this retailer as the "real tax avoider."

Tesla (TSLA), meanwhile, bounced sharply from its $45 billion market cap -- pacing for its best week since February 2016, up 14% so far -- after the electric car maker said Model 3 production is its "highest priority," and eased concerns over its cash flow. NetApp (NTAP) is also set to finish the week strong, after the data storage specialist received positive feedback after its analyst day.

Analysts Grow Skeptical of Chip Stocks

Semiconductor stocks were Wall Street's radar this week, with several analysts turning bearish on the sector following its long-term outperformance. For starters, Wells Fargo on Monday forecast a sharp decline in sales growth for Nvidia (NVDA), sending its shares down more than 4% -- though BofA-Merrill Lynch pegged a buying opportunity. UBS, meanwhile, slapped "sell" ratings on these two chip stocks.

Spotify Goes Public

Elsewhere in the tech sphere, Fitbit (FIT) entered the week in record-low territory after being downgraded at Morgan Stanley, and Spotify (SPOT) began trading publicly -- with two analysts calling the streaming music stock a "buy." And as PayPal (PYPL) pulled back on rumors it could be the next Amazon victim, fellow electronic payments processer Square (SQ) retreated to a historically bullish trendline.

TENX Stock Paces for a 42% Weekly Gain

The healthcare sector nabbed its fair share of attention this week, too. Blue-chip buyout buzz fueled a big rally in Humana (HUM) shares on Monday, while Bio-Path Holdings (BPTH) stock had its best day in years on the back of positive mid-stage data for the biotech's cancer drug. Tenax Therapeutics (TENX) also gained ground, adding more than 42% so far this week, thanks to a nod from the Food and Drug Administration (FDA). On the flip side, a downgrade put the pressure on PTC Therapeutics (PTCT) stock, and Conatus Pharmaceuticals (CNAT) spiraled on disappointing drug data.

GameStop Bounces Back in a Big Way

Consumer discretionary stocks helped keep markets higher for most of the week. RBC appears upbeat toward one particular name, saying to buy the dip on Olive Garden parent Darden Restaurants (DRI) -- though call buyers may want to target these 3 Amazon rivals right now. Meanwhile, bargain hunters swooped in on GameStop (GME) -- putting shares of the video game retailer on track for their best week since early December -- while outperforming Macy's (M) seems overdue for upgrades.

Fed Minutes, Big Bank Earnings

There's plenty of action next week to keep the volatile trade action going -- potentially making this options strategy worth a look. In addition to the minutes from the March Fed meeting, first-quarter earnings season kicks off with several big banks set to report. And while delta-hedge selling risk is amplified heading as we approach April options expiration, some sentiment signals are pointing to S&P outperformance in the short term.

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