How To Trade A Big Tech Fade

By | February 11, 2020

Early gains in the big technology stocks faded later in the session on Tuesday, after the FTC said it will look into prior acquisitions by Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Facebook (FB) and Microsoft (MSFT).

Furthermore, there is little doubt that the momentum in these names and their heavy weighting in the S&P 500 index has been a major factor powering the ongoing rally in the broader market. The anecdotal evidence is that they may have gone too far too fast.

The question then becomes: If these stocks are ripe for a retracement how do you play the pullback?

(not much to see on this chart)

The MicroSectors FANG+ Index -3X Inverse Leveraged ETNs (FNGD) is an exchange traded note that tries to reflect the inverse performance of the NYSE FANG+ Index on a daily compounded 3x or 300% leveraged basis. It is effectively a highly levered bet against the FANG stocks.

It goes without saying that any 3X leveraged fund, inverse or otherwise, is a very risky trading vehicle. Volatility can have tragic consequences for the less then extremely alert and nimble traders. It is not recommended for, well, nearly anyone, but if you have the skills then watch for signs of a bottom on the chart.

One important point to remember is that while are no signs of a technical bottom on the $FNDG chart, when it happens the transition will be quick.

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