Jonathan Krinsky, the chief market technician at BTIG, suggested that investors watch Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) as signs that the stock market has reached its bottom, as these names still retain a sizable portion of their pandemic gains.
However, in a note to clients, Krinsky argued that further declines are likely still necessary before the market reaches that level.
“Ultimately, these names breaking is likely the start of what could be a tradable bottom, but we need more evidence and probably lower levels,” he stated.
Krinsky noted that AAPL and TSLA, which both dropped on Thursday, are the only two stocks among the top eight in the Nasdaq that were still showing gains year-over-year headed into recent trading. Other names among the top eight include Microsoft (MSFT), Amazon (AMZN), Google (GOOG)(GOOGL) and Meta (META).
AAPL turned slightly negative for the 12-month period following Thursday’s 5% slide. TSLA remains about 3% higher over a one-year span, even with a nearly 7% drop on Thursday.
The BTIG chief market technician spotlighted the fact that, going into Thursday, TSLA remained higher by about 350% compared to its pre-COVID highs. Meanwhile, AAPL was up about 78% from that mark.
As to the overall market, Krinsky contended that a further drop might be necessary to reach a tradable bottom, pointing to levels below 3,600 on the S&P 500. The index closed at 3,640.47 on Thursday after hitting an intraday 52-week low of 3,610.40.
“A break of 3,589 into [Friday] coinciding with a bigger VIX curve inversion would be more meaningful,” he stated. “Below 3,589 the levels get messier, but would be on watch for 3,550 (Oct. ’20 high) and then 3,505 (50% retracement of the March ’20 low to Jan ’22 high).”
For more on current market conditions, see how the major averages are responding on Friday.
