Hey Trader,

For years, growth stocks and tech stocks were growing at breakneck speeds.

But then COVID hit …

And they went supersonic.

With stimulus money pouring into markets, and swaths of new traders entering the marketplace, thanks to lockdowns, meme stocks, and new trading apps …

Some of the biggest names on the market saw absolutely astronomical growth during 2020 and 2021.

But … 2022 is a different story.

Many of the market bigwigs seem to have stalled out … or reversed.

The question on everyone’s mind is …

How low will they go?

Let’s take a step back and look.

First, we need to put things into perspective.

Yes, if you look at the last few months, it seems like markets have absolutely gotten walloped …

The S&P 500 (Ticker: SPX) has definitely lost some ground …

But let’s back it up a little more …

Take a look at where the SPX was trading pre-COVID versus where it is at now:

We are still well above where we were trading before the pandemic hit.

Speaking of pandemic elevation …

Given the volatility we’ve seen over the last two years, Friday’s VIX close of 24.64 might FEEL low …

But a nearly-25 VIX is STILL quite high, even if we’ve started to get used to it.

Previously, the mode of the VIX was the 12-handle, meaning the VIX was in the 12’s more often than any other integer.

We have not seen a VIX of 12 in more than two years!

This means that there is a lot of volatility in the market … which creates lots of opportunities for traders.

Add to this that the Fed isn’t stepping in to “bail out” markets (or some sector of the market!) essentially for the first time since the 1970’s.

That means the trading “playbook” many traders have relied on to play the Fed liquidity train is OUT for the foreseeable future.

Does this mean we are doomed?

Not at all.

But it does mean that we may have further down to go …

And some of the biggest COVID gainers could see their massive gains dissipate.

Especially because growth stocks hate interest rate hikes …

And people take a “risk off” attitude in recessionary environments. They’re not going to put money on the line hoping for “growth” that isn’t happening.

Let’s look at an example …

Amazon (Ticker: AMZN) was arguably the biggest pandemic gainer …

And yes, it has fallen hard so far in 2022 …

But it needs to shed another 17% to get back to where it closed on the first day of trading in 2020.

And I would not be surprised to see it get there.

Amazon is wildly successful … but the insane growth it saw over the last two years is incredibly difficult to maintain.

Or how about another market favorite, and frequent headline maker, Tesla (Ticker: TSLA)?

The stock saw unbelievable growth during the 2020-2021 bull run … we’re talking nearly a 1,300% increase from its price on January 2, 2020 to its price on January 3, 2022!

But TSLA isn’t immune to market forces … and they’re staring down the same problems as everyone else …

Chip shortages, battery issues, supply issues, you name it …

Plus, TSLA had relatively few real competitors in 2020.

Now everyone’s trying to grab a slice of the electric vehicle (EV) pie …

Ford (Ticker: F), General Motors (Ticker: GM), Toyota Motor Corp. (Ticker: TM), you name it!

Even less mainstream names like Rivian Automotive (Ticker: RIVN) and Lucid Group (Ticker: LCID) could pose a threat to TSLA’s market share.

TSLA’s days of absolute EV domination are done …

And with the shares still up nearly eight times their pre-COVID trading price (split-adjusted, of course) … I think TSLA has more ground to give back before all it said and done.

Do I expect them to drop all the way back to pre-pandemic levels?

Not necessarily … but I could easily see a dip to $400 or lower in the not-so-distant future, especially if the current “risk off” environment continues.

And of course, there’s Apple (Ticker: AAPL) …

People love AAPL. People don’t want to let go of AAPL.

And can you really blame them?

AAPL has been a market darling and cult stock for years …

But the pandemic really saw it boom in a way that no one could ignore.

No, it didn’t quite see the same growth multiple as TSLA …

But a 142% two-year gain is still solid … and even after a disappointing first half of 2022, the shares are still at a 93% premium from where they started in 2020.

Now, like I said … people love AAPL.

They have a hard time letting it go.

So I think once we see a big AAPL capitulation … the market as a whole may finally be nearing a bottom, with selling finally beginning to get exhausted.

I like AAPL near $100.

So with market giants teetering on the edge … where should retail traders turn to refuge?

Andrew Giovinazzi and I shared our thoughts earlier this week – catch the replay here.

Your Only Option,

Mark Sebastian