Stocks Sell Off Into the Weekend, and Charting Netflix’s Next Move 9/15/23

0:01Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast in sight and now layoffs for the latest ramifications from the UAW strike and what it could mean for the industry. A live report coming up. And later, Netflix's new move. Shares of the streamer started this year out on a tear, but just finished its worst week of 2023. Is this a blip or are stranger things ahead? We'll ask the chart master. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Carter Worth and Steve Grasso. And we start off with the NASDAQ led sell off on Wall Street.

0:48The tech heavy index closing down 217 points, more than 1.5%. The composite now on a two-week losing streak. The S &P 500 and Dow also getting hit today. Tech stocks leading the losses, advanced micro devices, applied materials, Adobe, NVIDIA among the biggest laggards today. The sector now also the biggest loser in September, down more than 4 % so far. So how do you interpret today's actions as we turn our attention to the Fed here? And of course, rates were a big part of this whole so often. Yeah, the irony is that the Fed's on hold next week. And the ECB told us yesterday or the day before they're on hold for the foreseeable.

1:23And yet rates, we finished within a whisper of the cycle high on the 10-year. Look at Japan, JGB yields. I know most people don't on a daily basis, but I think Japanese bond yields maybe could slingshot higher if you look at their 10-year. And some of the price action that we've seen in the BOJ has been, I think, somewhat erratic. So equities, back to equities, if you look at the underperformance today, it was the places you You don't want to see it if you just want the market as a whole to go higher. Semiconductors were down 3 percent. They're basically on a relative low to the S &P going back three months.

1:55And that's where the leadership has been. So clearly, big cap tech underperformed today. And I think a lot of this really does come from fear on interest rates. So I think the week was summarized with China, right? So China, Apple, that took the lead. Everyone got spooked out of tech. I don't think it had anything to do with rates. To Tim's point, the Fed is going to be on hold. So I think the market got spooked from China. I think ARM had a lot to do with the semiconductor performance, because I do believe it's still a zero sum game if you manage money. So you would have to sell a lot of your semiconductors if you want to buy ARM.

2:32You would have to sell some of your tech if you want to buy ARM. So let's see how we line up next week. Quadruple, triple which this week, maybe next week different. I'm sorry, you think the negativity this week is Apple China? I think it was China that morphed. It's not 4.336 % on the 10-year yields? No, I don't think so, because we've had a lot of time to digest higher yields. I think that's right. And I think to the point where if you see the trend in yields, probably closer to the end than the beginning of it. So I don't think that's the reason why. I think that if you really look at the charts, it was Apple tech and that sort of contagion through the whole tech environment.

3:15I get what you're saying, but I feel like it's almost like a one-two punch here because you have higher yields. Plus, you have doubts around the tech story, like the TSMC, you know, indicating that there may be weaker chip demand. So these two things combined are sending sort of shivers through the tech sector. Sure, but also to your point, I mean, right, rates haven't really moved much higher than where they were two weeks ago, three weeks ago. We're basically four and a quarter, four and a quarter. But the distribution in tech is now more than a month old. The leading stock of all, of course, down more than 14 percent from its peak.

3:44And Apple continues to struggle. We're coming up on the one-year anniversary of Apple's relative performance peak to its sector. It's just been a horrible number one stock has been an alpha negative proposition for a year. Yeah, I mean, I guess this is an interesting debate because ultimately I think yields, I don't know if they're going to go a lot higher, but I feel like we're bumping up against a really key level. And I see global rates going higher. And I see dynamics on inflation that aren't getting better. And so, you know, I think ultimately I think there's a limit to how high things can go.

4:14But I think there are technical factors at work here. I also see a dollar that continues to break higher. I think that's been negative for equities this week. So, look, Apple had a big week. I mean, if you think about the Apple story and we are covering both Apple in terms of the China kind of headwinds, but really the new release and Huawei. I couldn't agree more, though, that I get most concerned about semiconductors underperforming. And they they have yet to make a relative new high since that May 25th. And video, you know, but they've been holding serve. And that's why it's interesting, because today, semis, the SMH traded right down to the 100 day, which it hasn't traded through to the downside, going all the way back to December of last year.

4:52That weakness. But that is that is China, though, too. If you think about how that Apple story morphed into the semis, that that was the story of what was there going to be less of a demand? iPhones was going to be a demand there. Semiconductors, China, privacy, everything was in that same bucket. I mean, at the end of the day, look, the Qs led on the way down and they've led on the way back up. So we know the S &P peak to trough decline was 27 percent. The Qs were 37. But the Qs have yet to recoup their relative performance. They're still underperforming the S &P, the great Qs, since the peak.

5:30I mean, there seems like there are real doubts. I mean, for this for the sector, particularly when you look at the biggest cap tech stocks, they were seen as defensive. But in this light, it looks like there's a question in terms of demand. There isn't a story about Apple today that the iPhone 15, that the wait time was out till November. And on any other sort of day, that might have been a good thing for Apple would have would have held it up. But today it did not. Well, you know, I'm curious to be on this because I know he's he's had a position in Apple. I look at that Apple chart, and I'm definitely curious on your view.

6:01I mean, that to me is not a chart I want to own. No, a great uptrend, unbelievable uptrend, persistent, reliable, almost complacent. And then the first drop in gap, the second drop in gap, it has all the elements of a rollover. Yeah, for me, I'm still long it. I didn't buy it anymore. I bought it twice. I bought it on a declining basis. I go back to the May level of$170. So when I bought it, I thought$20 up,$10 down. I'm going to hold it until it breaks 170 or I'm going to try to sell it in the 190s. All right. So it's a binary. For me, I'm not in love with the setup because I do think, to your point, when Apple cracks, think of how many ETFs.

6:41Guy always points this out. Apple is him. The triple Qs, 11 percent of the triple Qs are Apple. So if you think about how much passive investing is, to Carter's point, if Apple sells off X percent, how many times does that have to be sold in a passive way through all of these other ETFs that have to get mirrored? So it's almost as if you're chasing your tail. It's creating more friction on the sell side as it goes down. Or maybe the flip side can be true in that think of how many funds own Apple and yet the chart still looks lousy. Do you? Well, interestingly, also, there was the issue that the biggest funds have all been underweight by mandate.

7:22Right. They have limits. They can only own five percent of the portfolio. Apple starts to get to be seven percent of the S &P. They're perpetually been underweight. So this is the greatest relief of all time just to have this thing come off. All right. Now let's get to a developing story here in Detroit. Auto workers at three U.S. auto plants slamming on the brakes on production. 13 ,000 union members walking off the job, heading to the picket line. This historic strike impacting General Motors, Ford, and Chrysler owner Stellantis. Our Phil Lebeau is live in the heart of the Motor City with the very latest on this.

7:53Phil. And, Melissa, all day long we've been talking about the fact that since production has shut down at these plants, one here in Michigan, one in Ohio, one in Missouri, there may ultimately be ripple-on effects, layoffs because production has stopped, and that's what we've heard about within the last hour. Let's start first off with Ford. As you take a look at shares of Ford over the last couple of days, is the company announcing it plans to lay off approximately 600 workers at the Michigan Assembly Plant. That is the plant where the UAW is on strike right now. The reason? Because the strike is stopping those workers who are at the plant in a different capacity from doing their jobs.

8:30In other words, they don't have the goods coming to them that were being supplied usually by UAW members. As a result, you can't do the work. They have to initiate a layoff there. General Motors just out with a note saying that it may have to halt production at its Fairfax, Kansas plant. This is the plant where they build the Cadillac XT4, the Chevy Malibu. The reason why? Because stampings for those vehicles, many of them come from the GM plant in Wentzville, Missouri that is on strike. Obviously, if they're on strike, they're not doing the stampings that would go over to Fairfax. GM putting out a statement saying, since Fairfax won't be able to run production due to a part shortage caused by the strike in Wentzville, Missouri.

9:15There is no work available. We are working under an expired agreement at Fairfax. Unfortunately, there are no provisions that allow for company-provided subpay in this circumstance. That's kind of a wordy way of saying that those employees will be laid off. As you look at shares of Stellantis, we have not heard about this happening with any Stellantis facilities, But Stellantis is set up just as General Motors and Ford are. All of these facilities are interconnected. I wouldn't be surprised, Melissa, if we hear some type of similar announcement from Stellantis in the days ahead. Melissa? Phil, the word layoff, does that mean that these workers are effectively fired?

9:55I mean, it's not a furlough. They're not being held. They're not being paid, obviously. Do they file for unemployment at this point? They're not fired. Yeah, they file for unemployment. and it means that the automakers are not on the hook to pay them. And that means they go through the state, whichever state the facility is located in, then you get into the labor and employment laws within that state. So they're laid off, essentially. Furlough might be the official term in some facilities. They're not fired. If the strike ends or strikes end at some point, these workers, nine times out of ten, they get hired back.

10:31Unless somebody has decided, look, I don't want to go back to work. I've decided to move on or whatever the case may be. But the automakers, they plan to bring these people back to work when production can resume. And no talks are scheduled right now? Not today. They plan to resume bargaining tomorrow. As we speak, Melissa, Sean Fain, president of the UAW, is leading a rally of UAW members and those who are also supporters of the UAW here in downtown Detroit. Senator Bernie Sanders is at this rally as well. They're going to march, I don't know, a couple of blocks in the area, and then they're going to come back here.

11:09All right, Phil, thank you. Phil LeBeau with the latest from Detroit. And while the big three automakers all posted gains this week, Tesla outperformed them all, rallying more than 10 percent since Monday. So what do we think here? It doesn't sound like anything's going to come to fruition in terms of agreement anytime soon, at least. No, and I think the kind of the surgical strategic nature of the strike, which is different, again, all three. It's never happened before, but different pieces, partly to conserve essentially resources in terms of their strike fund so that it can actually go longer.

11:41I mean, or at least, look, it's how you would be posturing now. We're ready to do what we have to do. We'll go as long as we can. We think we'd be as disruptive or more. It's just interesting that both sides, and the unions alleges, and their argument is these are record profits at the big three, and we want to share in the record rewards. These stocks have not been trading like they're record profits. And so, you know, some of it has been this overhang. But a lot of this has been about think of the investment they have to make in EV. Think about the cost structure. Think how screwed up Ford, lack of a better financial term, has been in terms of their cost structure globally and how they've been working.

12:18And they've been doing a great job to get it back. So, you know, that to me is the dynamic. It's with some great irony. And, of course, these stocks, you know, for the most part played pretty well today because I think that the first salvo here didn't look as devastating on the surface. I mean, you speak of record profits and the irony is, of course, the stocks think about banks, record profits. It's not about the profits. Ultimately, long term, yes, it's about how they act. And the real tell has been that the U.S. auto manufacturers have been such laggards compared to BMW and Mercedes compared to the big Japanese like Toyota and Honda and Nissan.

12:49It's just it's not a great place to be, I would think, on the long side. You just have Ford is up 8%. We're all talking about the same thing. Ford's up 8 % year to date. GM, it's a push. And Tesla's up 122%. You just don't have the overhang. You don't have that hanging over the stock in Tesla like you do in the big three. That's why people migrate. How does that chart look? Tesla, okay. So obviously different altogether. The question now is, is this strength, both absolute and relative, getting a bit stretched? I think so. All right. Coming up, streaming struggles. Shares of Netflix taking a big, like, lower this week.

13:24So should, but investors have even more beef with this stock. The chartmaster has some thoughts on where it's heading to the penny. Later in options action, it's been a rough summer for airline stocks. But the chartmaster says these shares might be ready to take flight. What he is seeing in the skies and how to trade the names. Fast Money is back in two.

13:45Welcome back to Fast Money. Netflix notching its worst week of the year, dropping over 10 percent since Monday. After a stellar start to the year, the stock is down more than 20 percent from its recent highs. So what's the next move for the streaming giant? Chartmaster, what do you think? Yeah, a little bit of a setback. Before we get to the charts, I think it's important to say that this is just a beta trade in many ways. If you think about last year, the Qs dropped 35 percent. It drops 52. And now on the way back up, Netflix is underperforming. So it goes down more, goes up less. Let's look at a long-term chart.

14:14This is an all-data chart. It's very precise lines. And we bounced off that lower band. But the arrow I've drawn is I think we're going to revisit the lower band. Let's go in a little tighter here. That's a 20-year chart. And so if you look at it in a more here and now chart, what you'll find is we've just come to and now broken to the downside out of that formation. Converging tread lines. You can call it a wedge. You can call it whatever you want. But it's a break the wrong way. Let's just take the bottom line, the same chart, and remove the top. The key is how much of a break is this? Well, let's go even shorter term, final chart.

14:50And what we have here, of course, is talk about to the penny. It has bounced off that trend line six times. And this time we're now breaching. Does it have to keep going lower? No. Is that my bet? Yes. And the fundamental picture is clouded now. The commentary from the company throwing some questions about operating margin and also mixed shift in terms of the growth being from international, that being a lower average revenue per member business. Yeah, and I think there were a couple of things that were the tailwind. And obviously on Carter's chart, you saw how everything got so overly pessimistic, bounced from there, but you had the writer's strike.

15:25That was the tailwind, in my opinion. You have the ad service. That was the tailwind. And then you have the password sharing, the crackdown. That was the tailwind. All of those three seem like they're a little bit long of the tooth, so I agree. I concur with your analysis on the technical side. Well, the paid monetization dynamics in 2Q that were just reported, excuse me, in 3Q were plus 7 percent. That was weaker than people had expected. So you have seen this slow down and agree. Netflix tends to be a higher beta to the group in terms of the charts. But to be clear also, I mean, the excitement for Netflix was not just that.

16:03I mean, they were going up on fundamental reasons. And I know you're not suggesting that they weren't. I think you're saying that when the Nasdaq's moving higher, you think it's a good place to be anyway. But that story, I do think, has had a lot of legs behind it. And look, as someone that was long Netflix, I'm out of the stock now. I think I'm going to get it cheaper. What's playing out for Disney and what's playing out across linear TV is an argument why you want to own Netflix. And this is a company that's making money as opposed to these other guys that are figuring out what assets to sell to actually be able to make their next move.

16:36So I like it. I don't like it here. I mean, the theme that seems to be emerging is that Netflix has the great advantage of all these streaming companies. Without question. First of all, their content is amazing. And they have piles of content where others don't have that content, where others are spending a lot of money. Not that Netflix hasn't spent a lot of money on it. But still, when you stream anything, their interface is the best in the business. It's everything else. It's them. It's Amazon Prime. Everything else I find clunky. that's still theirs in the streaming world, to Tim's point. I just agree that I think the chart looks like it's breaking down.

17:14If you want to own Netflix for the longer term, which I agree with, you're going to wait and you're going to get a much better price entry. Coming up, going nuclear. Uranium prices are in rally mode and share of one big player in the space are trading at more than 12-year highs. What is driving the move and how you can play it? Plus, believe it or not, it's been 15 years since one of the most impactful bankruptcies on Wall Street. how things have changed since the collapse of Lehman Brothers. More Fast Money right after this.

17:49Welcome back to Fast Money. Uranium on fire this week. Check out shares of Cameco surging 9 % since Monday. The stock trading at levels not seen since March of 2011. Tim is a shareholder. What's your take? Oh, and by the way, Cameco? Cameco. I go Cameco. I go. Yeah. Yeah. I think you just checking in my head. I always say. Just go CCJ. Your tomato is my tomato. Either way, be long, be long the stock. And notably, you said 2011. Well, that's the Iranian price, too. Hasn't been this high. Sixty five fifty a pound. It's a combination of clean energy and energy security, you know, kind of coming as one lack of investment.

18:29And then on the bottom up and you have a you have a military dynamic in Niger where you have five percent of the world supply. And then you have the bottom-up dynamic at CCJ where they really are executing. And so this is something that, to me, the correlation to the uranium price is probably higher than it should be because I think there should be less volatility in the stock price. You can make an argument that any particular company could also have their own operational issues. But you stay long in the trade. I think we're getting to shortage time. I also feel like the higher price in crude this week didn't hurt that trade, Carter.

19:00And commodities in general. You get cattle through the roof, orange juice and sugar. It's on and on. All right. Meanwhile, today marks the 15-year anniversary of Lehman Brothers filing for bankruptcy, the collapse of the one-time venerated investment bank, one of the key markers of the financial crisis. In the months after the filing, the S &P dropped more than 45 percent, bottoming on March of 2009. So how much have things – I mean, so much has changed. That was a seminal moment. Yeah, I remember being on the floor back during that time period. You had rolling closes where you're trying to solicit buy side on these events and you didn't know who was going out of business, who was going to be saved.

19:36We all, I am sure I had friends that worked at Lehman. It was a it was a dire time and we recovered and we look back on it where the financial institutions are stronger than they've ever been. And hopefully we don't go through another period like that again. We were on air. I mean, I remember it well. And this is like we've chronicled so many times here on Fast Money. Wall Street's not the same, though. And there's no question that the dealer community, if you think about also the lack of the size of the book, the risk that's being taken, the size of the balance sheets, maybe this is good. Some of it's bad.

20:07I think there's a lot less liquidity on Wall Street than there used to be at a time when, you know, we may start to see more volatility shocks. So very sad day. Obviously, tremendously talented people. Wall Street has contracted dramatically from that point. Some of those changes were already happening. Some of those changes were clearly accelerated by Lehman. Where were you, Carter? I was either right here or at my desk. But I think the two things are important, of course, is that the VIX, right? So the market makes its low in March of 2009. But the events associated with September and October were actually the peak in the VIX, right?

20:38So that was the biggest fear moment. You had one of the biggest weekly drops. And then, interestingly, from that point to present, 15 years later, the investment banks as a group are underperforming the S &P. So adjusted for beta, it's just still. 15 years later. The S &P 500, investment bank and brokerage group, underperforming the market, calls into question, are those good business models at least maybe to work there, but to be owning the shares long term, probably not. What do you remember about that moment? You were right in the middle of it, too. I remember being on the air over the weekend.

21:12I mean, that was nuts. And you were fresh out of college. Exactly. Time for the final trade. Let's go around the horn. Tim? Yeah, I think if you look at the range on airlines charts, Carter, stick around for OA because he's going to talk about that. But I think the fundamentals in the space are still very strong. They're great trading stocks. This is a time to buy them. Chartmaster? Oil is feeling a little stressed. I think you start reducing your longs or sell USO. Steve Grasso? Arm Holdings. I've been trading it for the last two days. I went home long. Arm Holdings. All right. That does it for us.

21:43You're on Fast Money, but don't go anywhere. Options Action is up next.

22:06All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBC Universal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

22:41To view the full Fast Money Disclaimer, please visit CNBC.com forward slash Fast Money Disclaimer.