Don't Ignore This Chart!

When Will Internet Stocks Lose Their Connection?

Tom Bowley

Tom Bowley

Chief Market Strategist, EarningsBeats.com

Much of the bull market was led higher by technology, particularly the Dow Jones U.S. Internet Index.  So after the 2016 head & shoulders and long-term price breakdown, where might the current rally stall?  The 1015-1025 range has proven in the past to be quite significant.  Therefore, as prices move higher and into that range, we need to be careful.  The last attempt at a rally failed at 1025 and the declining 20 day EMA currently resides at 1020.  Visually, the red circle below highlights this range of potential resistance.


On a relative strength basis, internet stocks have performed quite well vs. the S&P 500 in 2016, but that's a minor positive as the overall market has been free-falling.  If the recent downtrend resumes, there's a good chance that this riskier internet space could become a target of the selling.  Relative support could be found near .500 level.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More