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Tech Stocks’ ‘Head Fake’ Is a Red Flag, But Divergent Stocks Will Still Soar

Tech stocks just did something they haven’t since 2008. And it’s confirming that peak divergence is teeing things up for a historic breakout.

An image of a computer keyboard with the figure of a bear standing on top of a key that says Nasdaq 100
Source: Shutterstock

At the same time, the broader market will struggle and potentially crash.

Folks, I cannot emphasize this enough.

The evidence is becoming overwhelming — indisputable, even. And it just keeps piling up. Over the next few months, the stock market may crash. But we’ve identified a group of stocks that — according to historical analysis — can rise well above the wreckage.

In other words, the choice is clear. Buy these divergent stocks today — or risk getting crushed in a bear market onslaught.

Here’s the latest development…

A Huge Reversal in Tech Stocks Is an Ominous Warning Sign

On Monday, May 2, tech stocks did something they haven’t since 2008 and, before that, 2001.

It’s something tech stocks tend to do only during bear markets and recessions — a massive intraday reversal off a yearly low. You see, the Nasdaq-100 dropped more than 1% on Monday, hitting a new 52-week low. It then reversed course throughout that same day, closing more than 1% higher.

Ostensibly, that’s bullish. At first, it looked like tech stocks would collapse. Instead, they rebounded with vigor.

That seems great, but historically, it’s been an ominous warning sign for stocks.

The Nasdaq-100 has only posted such huge reversals off yearly lows during the early stages of a bear market. This happened four separate times in early 2001, preceding a crash over the next three, six and 12 months. Again, it happened multiple times in late 2008, just before stocks crashed into 2009.

In other words, bullish reversals like the one we saw two days ago are normally just “head fakes.” They are dead cat bounces that result in a deeper stock market correction.

But they are also indicative of a critical “flip” in markets. Certain stocks do start to make a big comeback while the broader markets keep pushing lower.

And those stocks are divergent stocks.

Tech Stock Reversals Normally Kickstart a Divergent Stock Breakout

As you know, we’ve been pounding the table for the past few months over a unique market phenomenon called “divergence.”

Divergence centers around certain high-quality growth stocks seeing their prices diverge from revenues and earnings during periods of market volatility. This once-a-decade phenomenon tends to produce enormous returns for folks who buy the right divergent stocks at the right time… And that’s true even if the markets crash.

Most importantly, this anomaly is emerging right now for the first time in 14 years. And the perfect time to buy has arrived.

So, just last night, we aired an emergency broadcast on the 2022 Divergence. And we delivered an exclusive report on the top stocks to buy now to capitalize on this incredible opportunity.

Immediately after that briefing, I got right back to work analyzing this phenomenon. And that’s when I connected the dots between divergence and the unique reversal pattern that occurred just two days ago.

The connection? While an ominous sign for the broader markets, that reversal tends to be the catalyst for divergent stocks to begin their breakout!

In early 2001, after a streak of these “head fake” reversals, the Nasdaq-100 plunged more than 50% into late 2002. But over that same stretch, certain high-quality divergent stocks like Amazon (NASDAQ:AMZN), eBay (NASDAQ:EBAY) and Intuit (NASDAQ:INTU) all rallied, paced by a 60% gain in AMZN.

The same thing happened in late 2008. Around that time, the Nasdaq-100 pulled off a series of unique intraday reversals off 52-week lows. Over the subsequent few months, the index dropped almost 20%. But certain high-quality divergent stocks like Amazon, Netflix (NASDAQ:NFLX) and Booking (NASDAQ:BKNG) popped between 20% and 55%!

What the Nasdaq did just two days ago is bearish for the market — but bullish for divergent stocks.

The implication, of course, is that you need to act on the divergence phenomenon today.

The longer you wait, the more at-risk you are of falling victim to a bear market onslaught. On the flipside, the quicker you act, the faster you’ll turn today’s market volatility into your personal opportunity.

The Final Word on a Tech Stock Breakout

Last night, in my Divergence 2022 emergency briefing, I delivered what I believe will go down as the most important message of investment career.

Then I discovered that what we’re seeing today is the perfect setup for divergent stocks to start a big breakout. It’s the same setup these stocks had in 2001 and 2008, leading them to soar while the broader market crashed.

You couldn’t even make this stuff up. All the stars are aligning in a way that I never even imagined was possible.

Divergence 2022 is here. It’s indisputable. It’s unarguable. And it’s the biggest money-making opportunity of the century.

The only question is: Will you capitalize on it? Or are you going to let a bear market onslaught crush your portfolio?

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.


Article printed from InvestorPlace Media, https://investorplace.com/hypergrowthinvesting/2022/05/tech-stocks-head-fake-is-a-red-flag-but-divergent-stocks-will-still-soar/.

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