Don't Ignore This Chart!

When Will Internet Stocks Lose Their Connection?

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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 at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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