The most popular stocks reveal a frighteningly risky chart pattern that could indicate more trouble ahead for the FANG stocks and the entire stock market.
“Head and Shoulders” Pattern: What Does It Mean?
FANG stocks – Facebook, Amazon, Netflix, and Google-parent company Alphabet – were evaluated in terms of performance by a chart analyst at Bank of America Merrill Lynch. A familar “head and shoulders” chart pattern, which had been witnessed the previous year prior to the market falling apart, has once again revealed itself.
Stephen Suttmietter, chief equity technical strategist at Bank of America-Merrill Lynch, is convinced that the threatening pattern’s yield hints a possible fallback for the rest of the market.
Investors were perturbed mostly about Facebook and Alphabet on Monday when its shares slid over 6%. Amazon dropped more than 4%, while Netflix – commonly known as the relative out-performer – decreased nearly 2%.
In total, the tech giants lost nearly $130 billion in market value and resulted to a 1.6% slump in the Nasdaq Composite
The FANG stocks revealed its recent “head and shoulders” pattern after the stocks hit a high in March, even more higher in April, and a lower high in late May.
On Wednesday, Stocks Were Once Again In A Waging War
As of noon Wednesday, FANG stocks were trading at a negative position. With all the losses that took place this week, Alphabet has eliminated its gains for the year and Facebook has once again entered bear market territory, dropping 23.5% from its recent high in July 2018.
According to Mark Mahaney, lead tech analyst at RBC Capital Markets, it is improbable that we’ll witness any alterations in the top-line growth rates for these companies due to regulation. He also adds that he believes that is highly unlikely that any antitrust inspection would lead to any sort of forced sale or disposal of assets for the tech giants FANG.