Where's The NASDAQ 100 Headed Next?
Deron Wagner | Aug 28, 2019 12:21AM ET
h2 Monitoring FAANG Stocks For Clues/h2
In this article we analyze the daily charts of FAANG stocks to see what clues they offer as to where the NASDAQ 100 is headed during the next few weeks.
Before we dive into the charts, the FAANG acronym stands for five of the biggest tech giants in the market, Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), and Alphabet (NASDAQ:GOOG), which can account for 30-40% of NASDAQ 100 weighting.
Let’s start with a chart of the NASDAQ 100 ETF (NASDAQ:QQQ), which, for the past weeks, has been in chop mode, trapped below the 50-day MA (blue line) but still well above the rising 200-day MA (orange line).
The daily chart of Facebook doesn’t offer much help as it has performed pretty close to QQQ, though it’s currently trending lower, below a declining 20-day EME with lower highs and lows in place. A test of the 200-day MA is potentially in play here, but that wouldn’t be ugly at all, as it would give the stock some time to base out and eventually move higher.
The daily chart of Amazon is at a critical area and may be able to offer some clues depending on how it holds up the next week or two. AMZN is already at support of the 200-day MA (under-performing QQQ) with a 50-day MA that is beginning to turn down. A break of the 200-day MA, that holds (follows line B), would be a clear negative sign for the next few weeks and for the NASDAQ 100.
Get The News You Want
Whenever an obvious support level is broken, there is always the possibility of a false breakdown, which is quick recovery back above support within a few days that holds (follows line A).
Apple is showing relative strength as it’s still above the rising 50-day MA, but the ugly stalling at resistance around $215 and bearish volume pattern doesn’t inspire much confidence. A break of the 50-day MA would suggest a test of the 200-day MA is coming.
Netfilx has already broken down well ahead of QQQ and is in a strong downtrend below the declining 10 and 20-day averages. Look for support to come in around $269, which the price potentially dipping to $233 if the NASDAQ 100 breaks below current range lows.
GOOGL is in decent shape at support from the rising 50-day MA and rising 200-day MA just below. A break of the 200-day MA would be excessive, and cause for some concern, as well as suggest a test of the 1040 area.
So what can we take from all the analysis above?
The charts of NFLX and FB aren’t very useful as they are already in trend mode (though noting that NFLX is already broken). GOOG also won’t offer us much unless it breaks the 200-day MA. A break of the 50-day MA in AAPL on volume could offer some insight.
But based on the daily charts above, AMZN can make the biggest impact with a break of the 200-day MA, which would suggest institutional money is exiting a big time market leader. Such a breakdown would also suggest the NASDAQ 100 is headed lower for a few weeks as well.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.