Prudent investors ought to pay attention to a menacing pattern developing in the stock market.
Please click here for an annotated chart.
The chart is of the Nasdaq 100 ETF QQQ, A similar pattern can be seen in S&P 500 ETF SPY, I picked QQQ because the pattern is more pronounced. And it contains popular stocks including Facebook FB, Apple AAPL, Amazon AMZN, Netflix NFLX, and Google GOOG, GOOGL.
It is important to note that in addition to the so-called FAANG stocks listed above, other popular tech stocks were also dumped. Notable examples are Nvidia NVDA, Advanced Micro Devices AMD, Microsoft MSFT, Alibaba BABA, Tesla TSLA, and Applied Materials AMAT.
In addition to technology stocks, popular biotech stocks such as Amgen AMGN, Celgene CELG, Gilead GILD, and Biogen BIIB, were also unloaded.
Here are the key points from the chart linked above.
• An “outside day” was traced. That’s when the high of the day is higher than the high of the previous day, and the low of the day is lower than the low of the previous day. That is bearish.
• An outside day occurred at an all-time high. That is bearish.
• RSI, which is a momentum indicator, gave a very short-term sell signal.
• Volume was heavier than in recent days. That is bearish.
• Volume was not as heavy as prior sell-offs. That makes the pattern less bearish.
• The close was significantly above the low of the day. That makes the pattern less bearish…Read more at MarketWatch
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