The last two weeks have been tough, and in many ways, necessary. But Friday was a classic tug-of-war and the kind of gut check that is a great part of price discovery.

Market Breadth	NYSE	NASDAQ
Advancing	2,542	2,776
Declining	724	1,309
52 Week High	215	256
52 Week Low	93	198
Up Volume	4.77B	4.41B
Down Volume	1.94B	3.16B

Talk about spunk! The NASDAQ Composite had to pull a U-turn around the freefall, or (as history has shown before) it would have been vulnerable to another double-digit move to the downside. Perhaps it was time for a comeuppance in tech stocks, which had rallied non-stop for a long time, but the truth is much different and nuanced.

_{NASDAQ Composite}

Mega Cap & Momentum Comeuppance

The mega-cap growth names peaked months ago, and all the speculative Special Purpose Acquisition Companies (SPACs) and Initial Public Offerings (IPOs) were also fading. Yes, we learned that not every electric vehicle (EV) stock makes it, but does anyone think there will be dozens of successful players in the space?

The last two weeks have been overdue for a pullback. Now the question is - which names are down with the pack and simply oversold?  There is no doubt that a lot of money rotated out of names with sky-high traditional valuations – and into familiar and heretofore boring names with much lower valuations.

Is this a comeuppance or something big, where the also-rans run the roost for a while?

Much has been made about legacy automakers now outperforming Tesla (TSLA) for the year.

2021 Performance

• Ford (F): +39%
• General Motors: (GM) +29%
• Tesla (TSLA): -15%

First, year-to-date data is just trivia unless you sold all your stocks on December 31, 2020, and bought brand new stocks on January 4, 2021. But it’s the kind of stuff used to portray narratives in the financial media that are intriguing.

Looking at a one-year chart, it’s clear there could be more downside for Tesla. However, I think it could make a monster bounce off the trendline. Meanwhile, Ford and GM should continue to trend higher in their channels.

I suspect there will be enhanced volatility for a while, but maybe we could see a bottoming process soon.

Portfolio Approach

We are adding to Consumer Discretionary this morning.

 

Today’s Session

Reopening

More states reopen

More people are traveling

Malls (around me) were more packed than I’ve seen since Pandemic hit

There is a lot of talk about when Jay Powell will blink.  I do not think it’s a question on when or if, just what is the magic number with the ten-year bond yield, or how much more pressure does the stock market have to endure. 

10 Year

The Fed probably will be focused more on the S&P 500 than the NASDAQ, where most of the carnage is occurring.   I think a sustained level above 1.60% does the trick. 

Meanwhile, for today, key downside numbers are easy – Friday’s lows make for perfect test of support and a gauge of the strength of holders.

Support

• NASDAQ 12,397
• S&P 500 3,730
• Russell 2000 2,085
• DJIA 30,766

Comments

Just signed up Friday and am already enjoying your insightful commentary. Watch you show everyday! JP Hamilton on 3/8/2021 10:06:02 AM

I feel that the EV market is oversold in some stocks never bet against innovation... as the snag of refueling is resolved I believe you'll see big moves Blake Smith on 3/8/2021 10:07:51 AM

Monday, monday. Thanks Charles, always good! Lorin K on 3/8/2021 10:29:49 AM

Enjoy reading your comments Charles. I think you are spot on. Read your bio a long time ago and have always wanted to tell you I was an SP in security over 50 years ago. Was station in Southeast Asia for two and half years and the remainder my time in SAC Aircraft at Ellsworth and Minot AFB. One stock I would like you to look at is PLL (Piedmont Lithium Limited) here where I live in Gaston County NC. Is this a flake or has potentials. I am chicken of such stocks. Bought 10 shares at 28 dollars and lately has climbed to 80 dollars. Thanks for all your hard work. You are a self made man! Good work Lanny Hope on 3/8/2021 11:04:56 AM

Thank you so much Lanny.  I've seen PLL will take another look.  I appreciate you taking the time and your kind words.  CP Charles Payne on 3/8/2021 11:07:13 AM

I appreciate your feedback Charles. You are a smart guy. Sometimes I feel guilty that I'm not paying you a fee! ;) Kelly Morrison on 3/8/2021 12:45:54 PM

Simply thank you! I've made a lot of money after reading your book. May God bless you for helping the small invested manage our own portfolio. Richard B Richard B on 3/8/2021 3:08:03 PM

Charles, I enjoy your up beat and in your face happy personality. I wish more people would try to imitate your great personality. You are one of a kind. Michael Michael Proveaux on 3/8/2021 6:06:51 PM

Interesting on TSLA. I feel TSLA has more room to fall as well. Not sure where the transition to EV is going. You can't cure an addiction to oil by removing the oil. There has to be something sustainable and better (more cost effective, makes sense to own). I have recently read that if 3 people owned EVs in my neighborhood, the neighborhood grid cannot support that electric pull. These issues must be addressed before moving to cut people from oil otherwise we are just trading one problem for other problems. Lisa Ellis on 3/8/2021 7:46:38 PM

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