FANG drops – what is holding up the stock market

“FANG” stands for Facebook, Amazon, NetFlix, and Google. Note the weakness in these stocks, especially NetFlix and Google. The S&P 500 and the Dow have been dropping for two weeks while the Nasdaq Composite) has dropped for three weeks and has broken its bullish tend line that began in April. Historically, the technology laden Nasdaq leads the stock market. Previously, I’ve laid out how hollow many of the most bullish stocks are. Now, we can start to see the weakness by simply looking at the main stock averages. The price has been moving away from the top line of the wedge in the S&P and Dow and from the top of the bullish trend channel in the Nasdaq Composite. Notice how the down bars since early June have been bigger than the up bars.

My table of stock-market sectors shows a divide between the Technology Group and the Cyclicals Group for the second-straight month. The Technology Group lost 1.9% while the Cyclicals Group gained 0.9%. Stocks in both of these groups are considered growth stocks. A broad-based rally is not possible with a big part of the growth stocks sputtering.

Here’s the chart of the Nasdaq Composite:

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