Big Tech Won’t Hold up the Market

by Serge Berger | August 27, 2013 10:45 am

Big Tech Won’t Hold up the Market

As oversold U.S. equities bounced in the second half of last week, big tech was leading the way, represented by the Nasdaq-100, or the Powershares ETF (QQQ[1]).

On Monday, the Q’s again looked to be leading the way as they briefly retested their mid-August and year-to-date highs. As equities topped during the second half of the day, however, tech gave up all of its gains, leaving a notably bearish doji candle with a long upper shadow behind on the daily chart of the QQQ.

QQQ chart Big Tech Won't Hold up the Market
Click to Enlarge

To get a better idea of yesterday’s bearish turnaround in the QQQs, however, we need to look at its three largest holdings: Apple (AAPL[2]), Microsoft (MSFT[3]) and Google (GOOG[4]). Combined, these three stocks make up nearly 30% of the QQQ, thus looking at their charts will give us a better idea of what the index itself has in store.

In short, yesterday’s parade of news about Syria, Larry Summers and the debt limit wasn’t kind to any of these three stocks.

Apple, which still finds itself consolidating the move back up to the $500 area, also gave up most of its gains yesterday after its price was rejected near the recent highs. Follow-through selling in the coming days is thus very likely.

AAPL chart Big Tech Won't Hold up the Market
Click to Enlarge

Microsoft, after its big surge on Aug. 23, gapped down yesterday at the open and closed near the lower end of Friday’s trading range. With any further weakness, this stock will slip into the large up-gap from Friday (blue box on chart).

MSFT chart Big Tech Won't Hold up the Market
Click to Enlarge

And then there is Google — which, through these eyes, looks the heaviest of all three in the near-term as it hangs on to a confluence of support with all its might. With yesterday’s weakness, the stock is now again right back at its summer 2012 uptrend and its 100-day simple moving average. Any follow-through selling will likely push the stock below last week’s low.

GOOG chart Big Tech Won't Hold up the Market
Click to Enlarge

Serge Berger is the head trader and investment strategist for The Steady Trader[5]. Sign up for his free Weekly Market Outlook Video here[6]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. QQQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=QQQ
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  4. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  5. The Steady Trader: http://thesteadytrader.com/
  6. free Weekly Market Outlook Video here: http://www2.marketfy.com/l/15492/2013-05-06/4sf47

Source URL: http://investorplace.com/2013/08/big-technology-qqq-aapl-msft-goog/
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