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On June 9, the technology sector experienced its first significant one-day sell-off – and the financial news networks went crazy. Some of the so-called financial experts even said it's time to get rid of all tech stocks in your portfolio.
But on Tuesday, June 13, the sector rallied more than 1%, driving the Dow and S&P 500 to new record highs. And this time, all of those "experts" were saying it's now the perfect opportunity to buy tech stocks.
Now, these are the types of contradictions in the financial press that can be both confusing and detrimental to your portfolio.
So forget their media chatter and speculation…
Another Pullback Is Closer Than You May Think – Here's Why
"The FANGs" in this sense are what I and the rest of the markets call the four biggest tech stocks: Facebook Inc. (Nasdaq: FB), Amazon.com Inc. (Nasdaq: AMZN), Netflix Inc. (Nasdaq: NFLX), and Alphabet Inc. (Nasdaq: GOOGL) (although I still refer to it Google). These are the stocks that account for a significant percentage of the price increases in the stock market. In fact, on June 5, GOOGL was up 25.2%, AMZN was up 33.8%, NFLX was up 32.3%, and FB was up 32.3%.
After the big tech sell-off two Fridays ago, a couple of these stocks have tried to ramp up to new closing highs. In fact, FB has retraced upwards and, as of this writing, is within two points of its all-time closing high of $154.71 back on June 8.
AMZN reached an intraday high on Monday, June 19, after announcing its largest acquisition in the company's history, Whole Foods Market Inc. (NYSE: WFM), but has since settled back in right around $997 per share.
GOOGL, you could say, is in third place based on its performance post the June 9 drop. It hasn't done what FB and AMZN did in terms of trading up to its highs yet again. Actually, GOOGL has returned to its closing-price lows of June 9 of $970.12.
NFLX has shown the least impressive performance of the four since that June 9 sell-off. It, like the others, dropped a bit lower from that day's closing price… but where the others have shown some fight in them to move higher, NFLX hasn't even made it back to its June 9 closing low. It now trades at $152.
What this all means is that the media heads who have been jumping for joy at the prospect of a continued rally higher jumped a little too soon.
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.