Apple and Tesla have been trading off 'a weird game theory', says money manager Jeff Mills, who thinks tech stocks have further to fall

Money manager Jeff Mills thinks tech stocks like Apple and Tesla can drop further.
He told CNBC's "Trading Nation" Tesla is trading "80% above its 200 day moving average despite a 21% daily drop last week.
Both Apple and Tesla had their stocks split on 31 August.
He said both stocks have been trading at a "weird game theory, where investors are looking at buying a stock because they think other investors are going to buy the stock."
Tech stocks are trading 15% above their 200-day average, and Mills said he would before buying.
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Apple and Tesla stock prices are trading off a 'weird game theory' despite their recent stock splits, a top money manager said.

Apple and Tesla's both faced stock splits of 4-for-1 and 5-for-1 on 31 August.

Speaking to CNBC's "Trading Nation" Jeff Mills, chief investment officer at Bryn Mawr Trust, said Friday: "I look no further than Tesla and Apple and their stock splits. Investors really know that stock splits do not create value but they believe other investors believe they do."

"Those names have been trading off this weird game theory, where investors are looking at buying a stock because they think other investors are going to buy the stock and they can just sell it to them higher," Mills said.

Bryn Mawr Trust manages $1.75 billion in regulatory assets.

Mills, who has more than 20 years of experience in managing clients' money, thinks a tech-sell off seen in recent days is far from over.

Tech stocks faced a volatile few days with the likes of Tesla tanking as much as 21% last Tuesday after its surprise exclusion from the S&P 500 index in recent days. The world's most valuable carmaker had ticked many eligibility boxes but still didn't make the cut.

But he said despite the decline, Tesla was "still 80% above its 200 day moving average."

"If that gives you any perspective of where growth can go in terms of correction, there is still some magnitude to the downside," Mills said.

The-tech heavy Nasdaq suffered its worst weekly drop since March and closed 10% lower last Friday at 11,243.

This comes after tech stocks have enjoyed months of explosive gains, benefiting from widespread and extended coronavirus lockdowns as the pandemic shifted many working activities online.

Companies like Zoom and Amazon have also boomed.

Tesla has undoubtedly been one of the biggest beneficiaries, having risen more than 650% in the last 12 months.

Mills said while technical fundamentals are still intact, he would wait before tech stocks to move lower before buying into the sector.

"Earlier in the summer, you had something like 85% or 90% of technology stocks trading over their short-term 50-day moving average. That's very healthy, solid momentum. That has broken down now into the mid-50s. "But we're still not oversold."

"Technology remains 15% above that 200-day moving average," Mills said. "So, I would wait for a little bit more downside before dipping my toes into tech," he added.

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