Popular “FAANG” stocks suffered a blood bath Friday.
FAANG stocks are Facebook FB, Amazon AMZN, Apple AAPL, Netflix NFLX, and Google GOOG, GOOGL. They’re known as a group because of their persistent outperformance as large-cap U.S. technology stocks.
The technology bellwether Nasdaq Composite Index COMP, slid 1.8% on Friday, and the S&P 500 technology index plunged 2.7%.
Prudent investors ought to pay attention to the ominous pattern that is being traced now. Let us start with an annotated chart of Nasdaq 100 ETF QQQ. Big tech stocks have a heavy weighting in this exchange traded fund.
Please click here to see the annotated chart.
The pattern has four parts:
• A sustained rise.
• A “Key Reversal Bar” shown on the chart. On June 1, The Arora Report’s Morning Capsule said before the open of trading: “Nasdaq 100 Index traced a Key Reversal Bar. This is bearish. ETFs of interest are QQQ, PSQ, QLD, and QID.”
• An “Outside Day” shown on the chart.
• Heavy volume on the Outside Day.
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Historically, such a pattern can lead to a 5% to 7% correction. However, this has been a teflon market, and buyers may be lined up to buy on this dip…Read more at MarketWatch
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