| Tuesday, June 23, 2020 1. Markets come off highs as investors worry 2. When technical and fundamental targets agree 3. Online gamer stocks for the win Market Moves While bonds and the price of oil declined slightly, stocks and gold prices rallied slightly, demonstrating that investors are maintaining an opportunistic posture—at least for now. Today's price action on stock market indexes gave an indication midway through the session that investors may have hit a top of sorts.
The chart below compares the S&P 500 (SPX) and the Nasdaq 100 (NDX) on a 5-minute scale to display a close up of the price action for the day. Markets gapped higher on optimistic reports regarding U.S. home sales and an upgrade on Apple's price target from Deutsche Bank analysts. But once Dr. Anthony Fauci, Director of NIAID, began testifying before Congress about the state of the COVID-19 pandemic, the market became noticeably less confident.
It is also noteworthy that the Nasdaq index closed above its opening price while the S&P 500 closed below its opening price. This is consistent with the way technology stocks have once again begun leading other stocks. That the technology stocks continue to reach new highs is certainly bullish, but that stocks in other sectors lag behind is a troublesome signal for those who want to see the markets continue to march higher and higher.  [READER SURVEY: We are running a two-week survey of our U.S.-based readers to gauge your sentiment and see what moves, if any, you have been making with your money given the market recovery. We'll share the results, as always, and we thank you for your time and participation.]
When Technical and Fundamental Targets Agree
Some technical analysts like to point out that runaway gaps, such as this one today on AAPL, can often be used to measure the price move and establish a technical forecast for the near term. In this case, the chart below shows an example of how that might work. Offsetting gaps identify what may yet work out to be a midway point in the move. If so, then the price target would be $380 per share. It is interesting to note that this confirms and agrees with the recent price target upgrade. 
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Online Gamer Stocks For The Win A particularly interesting fund has made strong gains over the past three months. VanEck Vectors Video Gaming and eSports ETF (ESPO) has been able to capture the interest and increased activity in online entertainment during the pandemic. Though it is not among the most heavily traded ETFs available, its market-besting performance is unmistakable.
The chart below compares ESPO with its top 5 holdings. These include Nvidia (NVDA), Activision (ATVI), Tencent (HKEX: 700), Nintendo (TSE: 7974) and Advanced Micro Devices (AMD). Investors appear to be taking this industry group seriously. With the continuation of social distancing policies around the world, it is unlikely this trend will end soon.  The Bottom Line Investors remain enthusiastic about stocks, but COVID-19 worries put an obvious top on their optimism today. Among the best performing stocks today, Apple shares rose strongly but also sold off at the end. Online game stocks may benefit from extended social distancing policies, even if other stocks shave off gains as a result of pandemic fears.
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Tuesday, June 23, 2020
Topped Out
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