As FANG Direction Goes, So Does The Market

As FANG Direction Goes, So Does The Market
As FANG Goes, So Does The Market
As FANG Goes, So Does The Market Getty Images

FANG stocks (Facebook, Amazon, Apple, Netflix, and Google) rose more than 33% last year, helping power the S&P 500 to an over 19% gain and pushing the U.S. stock market to record highs in January.  Now, these tech stocks are being sold at a record pace.

The FANG index (NYFANG:IND), along with six other mega-cap technology stocks, fell 6.3% Tuesday, the biggest decline since September 2014. Yesterday (Wednesday), they fell another 2.4% with Amazon down 4.38%. FANG stocks are being sold and swapped for value-related stocks like commodity-related shares that typically outperform in late-cycle recoveries.

After this week's week’s beating, the ESM18 is down 2.5% on the year, and down 10% below its contract high of 2878.50 that was reached on January 26th. One view of the markets is that as long as FANG is weak, the rest of the markets will be too. Do I agree? I don't know, but what I do know is that until the selling lets up in tech stocks, it will be hard for the Nasdaq and S&P 500 stock indices to hold the rallies.

 

Yesterday, PitBull (Marty Schwartz) said to me, “We have never seen the ES and NQ move like this before.” I agree.  I have been in the business 40 years and have been part of every major stock market move since 1985, but I have never seen the markets move like they are now, especially in the Nasdaq 100 futures.  In the ES, it’s not just the giant daily ranges that are significant; it is the level of handles (points) the ES is trading in one day. It is astonishing!

Our View:

I am very concerned that if the NQ keeps going down, the ES will collapse. If the NQ takes out yesterday’s 6421 low, the ES will slide right through its 2587.00 200-day moving average and last week’s 2586.00 low.  To the upside, if the ES rallies and holds above 2635.00, it could be a quick trip back to 2660. There are a lot of shorts around to help that idea, but the NQ will need to show it can ‘hold the rallies,’ and currently, that isn’t happening.

Remember, today is the last trading day of the quarter.  Several economic reports (posted below) are due leading up to 10:00 a.m. and Friday the exchange is closed for Good Friday.

Today's Economic Calendar:

  • Weekly Bill Settlement
  • 52-Week Bill Settlement
  • 10-Yr TIPS Settlement
  • Jobless Claims 8:30 AM ET
  • Personal Income and Outlays 8:30 AM ET
  • Chicago PMI 9:45 AM ET
  • Bloomberg Consumer Comfort Index 9:45 AM ET
  • Consumer Sentiment 10:00 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • 3-Month Bill Announcement 11:00 AM ET
  • 6-Month Bill Announcement 11:00 AM ET
  • Baker-Hughes Rig Count 1:00 PM ET
  • Patrick Harker Speaks 1:00 PM ET
  • Fed Balance Sheet 4:30 PM ET
  • Money Supply 4:30 PM ET

 

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility. Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex contracts are based on underlying asset classes including forex, stock index futures, commodity futures, cryptocurrencies, and economic events.

Trading can be volatile and investors risk losing their investment on any given transaction. However, the design of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.