Is it game over for tech shares?

TL;DR

The US FANG index, representing major tech shares like Apple and Amazon, is on the verge of breaking a long-term trend line, indicating a potential significant downward movement. The FTSE is testing a major support line, suggesting a move lower, while the Nasdaq is falling and may lead the market on the way down.

Transcript

hello it's john burford with chart of the week for monday the 10th of january and this is the first full week trading week of the year and quite a lot has happened since before christmas seems so long ago now doesn't it i'm covering the um the huge mega cap us big name tech shares such as apple amazon and so on we're all very familiar with there is... Read More

Key Insights

• 🫰 The US FANG index has experienced a remarkable rally since the March 2020 crash, driven by rampant speculation and the popularity of penny stocks, non-fungible tokens, and meme stocks.
• 📉 Breaking the long-term trend line in the US FANG index could lead to a substantial downward movement, indicating a potential change in market sentiment.
• 🫥 The FTSE is at a critical juncture, challenging a major support line, suggesting a move lower.
• 🫥 The Nasdaq has broken above a solid resistance line but failed to maintain the upward momentum, implying a bearish outlook.
• 💗 Momentum divergences from major highs indicate weakening demand and growing bearishness in the market.
• 😥 Speculative indicators, like the major gap challenging chart, point towards potential bearish movements in shares like Tesla.
• 😮 While some value shares, like travel and banking shares, may see temporary positive momentum due to rising interest rates, a medium to long-term decline is expected.

Questions & Answers

Q: What is the US FANG index, and why is it important?

The US FANG index is an index that tracks major tech shares like Apple and Amazon. It is crucial because it provides a broader view of the performance of these tech giants collectively instead of focusing on individual stocks.

Q: What is the significance of the long-term trend line in the US FANG index analysis?

The long-term trend line acts as a crucial support-resistance level, separating bullish and bearish trends. Breaking this trend line convincingly may indicate a strong downward movement, potentially signaling a change in market sentiment.

Q: What are momentum divergences, and why are they important for market analysis?

Momentum divergences occur when the momentum of a stock or index decreases at subsequent highs. They suggest weakening demand and growing bearishness in the market, potentially pointing towards a significant downward move.

Q: What is the current outlook for the FTSE?

The FTSE is currently in a critical juncture, testing a major support line. Previous upside targets are no longer valid, and a move lower is anticipated, indicating a bearish outlook for the index.

Q: Why is the Nasdaq important in market analysis?

The Nasdaq is crucial because it comprises high-tech US stocks and is often considered a leading indicator for the broader market. Its movements can provide insights into investor sentiment towards technology and growth stocks.

Q: What is the significance of the major gap in the speculative indicator chart?

The major gap in the speculative indicator chart represents a significant price level where a sharp correction occurred. Challenging this gap but failing to break above it suggests a bearish outlook for the shares, such as Tesla, represented by the chart.

Summary & Key Takeaways

• The US FANG index, tracking major tech shares, has witnessed a remarkable rally since the March 2020 crash, fueled by rampant speculation and the popularity of non-fungible tokens and meme stocks.

• The index is currently approaching a critical resistance-turned-support trend line, which, if broken convincingly, may lead to a significant downward trend.

• The FTSE is testing a major support line, with previous upside targets no longer valid, indicating a potential move lower.

• The Nasdaq, comprising high-tech US stocks, has broken above a solid resistance line only to subsequently retreat, suggesting a bearish outlook.