Tech stocks face deeper pressure after sell-off as Ritholtz flags risk controls

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Tech stocks face deeper pressure

Highlights

Semiconductor stocks broke below their 200-day moving average last week as investors compressed valuation multiples despite continued record profit forecasts from executives.
Palantir Technologies closed at $160.38 on Friday, down 20% for the week and 14% below its 50-day moving average of $186.39, as momentum faded.
Okta fell 24% since breaching its $190 risk threshold, and Hewlett Packard Enterprise dropped 35% in a month, with AI-linked tech stocks broadly pressured by market adjustments.

Sell-off tests trading discipline in AI-linked names

As reported by CNBC, Ritholtz Wealth Management CEO Josh Brown says last week brings one of the most volatile market stretches in recent memory, with a post-election surge in the Dow Jones Industrial Average followed by a steep Nasdaq decline.

He describes semiconductor stocks as breaking below the sector's 200-day moving average after months of lagging their June highs, even as company executives continue to forecast record profits. In his view, investors are compressing valuation multiples across chip shares regardless of guidance, and the latest sell-off accelerates that pressure.

Brown says the overlap of sharp macro moves and earnings season is leaving investors with little clarity. He argues that stop-loss discipline becomes more important in a corrective market because it limits losses, can create tax offsets against gains, and preserves cash for new opportunities.

Palantir, Okta and HPE show extent of the pullback

Brown highlights Palantir Technologies as one of the clearest examples of a momentum trade losing support. The stock closes at $200.97 before his earlier column and falls 20% to $160.38 by Friday, moving below the $185 trading stop and nearing a weekly close below the $166 investor risk level.

He says Palantir is 14% below its 50-day moving average of $186.39 and 4.4% above its 200-day moving average of $153.56, with a relative strength index of 25. Okta is also cited as having breached the $190 level that had served as a risk management threshold, leaving the stock down 24% since the call and 28% below its $235 high.

Hewlett Packard Enterprise is down 39% from its October high and 35% over a month, according to Brown's review. He adds that Dell, HPE and Super Micro are among AI-favored stocks that are now under pressure as the market adjusts positions tied to expectations around a Democrat win.

Earlier, we reported that the Nasdaq 100 stayed below its 20-day and 50-day averages despite strong SpaceX results.

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