Stocks are on the slide once again. The Dow Jones Industrial Average lost its 200-day moving average on Tuesday and looks set to lose its 50-day moving average on Wednesday — ending the uptrend that started in early October.
The catalyst is another slide in energy prices after OPEC oil ministers disappointed markets on Friday by holding their production quota unchanged at 30 million barrels per day.
Crude oil fell to a seven-year low, while the Energy Select SPDR (XLE) touched lows not seen since late September, down nearly 17% from its early November high.
Investors are watching in horror as fourth-quarter earnings expectations are further marked down, setting the stage for the first three-quarter run of earnings drops since the financial crisis. And with the VelocityShares 2x VIX (TVIX) recommended to Edge subscribers up more than 22% so far this month, fear is certainly in the air.
This comes at a time of market vulnerability, as large-cap stocks (mainly popular Big Tech names) have diverged from weakness seen in commodities, high-yield bonds, small-cap stocks, transports and utilities. Measures of market breadth have been narrowing as well, with the number of stocks setting new 52-week lows rising all month. The Federal Reserve is also preparing the first interest rate hike in nine years.
Reality is setting back in, meaning the bulls need to prepare for big breakdowns in some of their Big Tech favorites.
Here are seven to watch out for.
Big Tech Stocks Losing Steam: Amazon (AMZN)
Amazon (AMZN) stock has fallen below the 20-day moving average for the first time since late September as the stochastic indicator drops out of overbought territory.
A couple of surprise quarterly profit announcements — driven by a pullback in the company’s torrid pace of capital expenditures — has made AMZN stock a sweetheart of 2015, more than doubling so far.
Without suffering a significant selloff since late last year, Amazon stock is overdue for a pullback.
Big Tech Stocks Losing Steam: Facebook (FB)
Solid user metrics and continued dominance of the social media realm has helped Facebook (FB) stock lift out of a long trading range near $80 earlier this year for a gain of nearly a third. But the stochastic indicator is set to drop below 50 for the first time since September.
The next bullish catalyst is supposed to be a deeper push into video advertising and streaming video, but that depends on overall corporate profitability fueling marketing budgets.
It’s easy to forget, with all the buzz over new media, that the industry depends on the business cycle. With earnings slowing, so too will advertising spends.
Big Tech Stocks Losing Steam: Microsoft (MSFT)
Buzz over Windows 10, cloud services and mobile devices under its new CEO has helped Microsoft (MSFT) stock post an impressive climb — more than doubling over the last few years and 40% from its lows back in August.
But for the first time since that summer selloff, some profit taking is materializing. At the very least, a drop to test its earnings gap highs in October — to around $50 — looks likely.
Big Tech Stocks Losing Steam: Alphabet (GOOG, GOOGL)
Goofy name change aside, Alphabet (GOOG, GOOGL) stock has been enjoying a nice lift out of its September low, continuing the rise out of a three-year trading range that started in July.
But shares have dropped below their 20-day moving average on Wednesday for the first time in months as profit taking takes hold.
The big bullish catalyst, according to analysts, is the upcoming release of new per-segment accounting data that is expected to give more visibility into the profitability of its core business.
Sounds like a “sell the news” catalyst to me.
Big Tech Stocks Losing Steam: Netflix (NFLX)
Netflix (NFLX), a favorite among video streaming stocks, has turned away from overhead resistance at its August high near $130, looking set for a drop back below its 20-day moving average.
Remember that the company’s last earnings report was clouded by weak U.S. subscriber additions, which the company blamed on the rollout of chip-based debit/credit cards.
With fresh competition from the likes of GOOGL’s YouTube, watch for continued pressure on its U.S. business.
Big Tech Stocks Losing Steam: Apple (AAPL)
Apple (AAPL) stock has fallen to once again test support at its 50-day moving average, risking a breakdown out of a consolidation range going back to August and a quick drop to $100 or below.
Concerns continue to linger about the company’s pace of innovation, demand for new iPhones, the success of the Apple Watch and sales in China. Fitbit (FIT) is also undercutting the Apple Watch with its fitness cache and lower selling price.
Recent analyst notes have been highlighting concerns out of the Asian supply chain as well, indicating a slowdown in unit orders.
Big Tech Stocks Losing Steam: Intel (INTC)
Intel (INTC) stock is hitting resistance from its October high near $35, rising a breakdown below both its 20- and 50-day moving averages as its stochastic indicator sets a lower high (suggesting a loss of momentum).
The bull story was all about how the company can shrug off waning PC demand because of the rise of cloud-driven data centers. Clearly, that’s not that compelling.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
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