As stock-index futures move higher, the optimist in you can safely argue that the bull market is still in force, despite headlines that might make you question such a view.
FANG may be a mess, but those companies are not the totality of the equity universe; they're merely an important slice. The major indexes wouldn't look so bad if bank and financial stocks would take up the lead -- but they haven't, so we're left with these wild swings as mega-cap tech stocks gyrate.
Below the surface, the stock market internals aren't nearly as bad as the headlines. For example, the net number of stocks making new one-year lows. After February's pounding, this measure has rebounded nicely. The Nasdaq Composite is in the top panel below. Notice that even with TSLA and FB sinking, the broader market is not taking part.
In terms of breadth, the S&P 500 looks close to oversold on a short-term basis, with only 24% of the stocks in the index trading above their 50-dma (20% is oversold, 80% is overbought, see chart.) And the drop Tuesday did not break the S&P's rising 200-dma, while over on the Nasdaq Composite it would have to fall another 4% to break its rising 200-dma.
Remember the old saying: The market leaders are the last ones to go. Technology is the leader, and it's clearly being punished. But here's the kicker -- technology and momentum stocks are still among the best performers YTD.
Source: Bloomberg Pro Terminal
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.