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Wall Street gives big-tech stocks the cold shoulder

Five things that could tank the market

After months of obsession and lavish buying interest among investors, mega-cap big-tech stocks suddenly find themselves out in the cold. Instead, Wall Street has recently shifted its focus to new areas such as small-cap stocks, financial institutions and energy companies.

From its mid-August low, the Russell 2000 small-cap index has climbed nearly 8 percent in smooth, unmitigated fashion. Save for a little bump at the start of September, it looks like a perfect 45-degree line up and to the right. The tech-heavy Nasdaq 100 hasn't been so lucky: It's trading at levels last hit in early June and has once again fallen under its 50-day moving average.

The trouble is that because of the heavy allocation the major stock indexes have to big-tech stocks, given their oversized market capitalizations, investors will have an increasingly hard time ignoring the sell-offs underway.

All the heavy hitters are on their heels. Amazon (AMZN), after a failed attempt at retaking the $1,000-a-share-level two weeks ago, has dropped in eight out of the last nine trading sessions for a loss of 6 percent. Tesla (TSLA) is down more than 10 percent. Apple (AAPL) is back to late July levels (chart below), down more than 9 percent from its recent high in midday trading on Monday.

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For now, the pullbacks look innocuous enough, as a combination of specific headwinds and a general sense valuations got a little too extended to the upside.

Most of the attention has been on Apple lately in the wake of reports of production delays on the iPhone X, tepid demand for the iPhone 8 and cellular connectivity issues for the Series 3 Apple Watch. According to the Nikkei Asian Review, problems with the production of 3-D sensors on the iPhone X could limit the device's availability ahead of the November release.

But other shares have been caught in the tailwind of selling as well, with artificial-intelligence play Nvidia (NVDA) dropping nearly 11 percent from its recent high on word Tesla is looking to work with AMD (AMD) on autonomous driving technology.  

Overall, none of this has seemed to matter much. SentimenTrader notes that Wall Street is about to close one of the calmest September's on record -- an impressive feat given the seasonal headwinds traditionally in play this time of year. Its research suggests calm Septembers tend to lead to calm Octobers as well. 

If so, expect recent strength in areas like small-cap stocks and energy to continue as the "sector rotation" dynamic plays on.