Monday Commentary
Monday - July 24, 2017
NDX (Nasdaq 100 Index) continues to consolidate above 5900 (previous high) and a break seems likely soon once more of the FANG stocks begin to report earnings. Can Google (earnings after the close) take us to new all-time highs or pull us back to 5800?
There is also a gap in the low to mid 5700s that is an important zone to keep an eye on. 6000 is the big psychological level for an upside break.
Update (post GOOGLE earnings): Well, it looks like FANG is 1 for 1 so far. After Netflix (NFLX) slaughtered the bears with much higher than anticipated subscriber growth, which lead to bullish euphoria, Google (GOOGL) could not provide the same type of magic.
While the earnings report actually looked good, the market realized that valuations are just too high. T-Mobile (TMUS) and Microsoft (MSFT) had great earnings last week but both ended the next day red. To put things in perspective, Google was trading under 900 before the last earnings report and just around 800 at the beginning of the year. How much higher is it supposed to go (this year)???
Although the NASDAQ-100 ended up putting in yet another all-time high, it seems as if the strength is waning, and a much needed pullback should be expected. To put things in perspective (again), the Nasdaq Futures (/NQU7) got as low as 5560 over the July 4th period; today it hit 5954.75; that's a nearly 400 point move over the last 20 days, which I personally think is a little beyond ridiculous.
Going forward, if Facebook (FB) and/or Amazon (AMZN) can't gain after earnings (regardless of whether the numbers are good or bad), I believe we have an intermediate term top here. This can carry on over August and September and possibly bleed into early October, at which time, could finally provide traders with an opportunity to get some discounts for what will likely be another Santa Claus rally much later in the year.