FANG has a Cavity

It would appear that after the very disappointing earnings results from AMZN and GOOG that the so-called FANG has a cavity.  Indeed a very big cavity that spread its pain all around the world.   Both, Asian and European market are both lower this morning.  US Futures indicate that yesterday’s 400 point Dow rally will be completely wiped out this morning with an ugly gap down open.

As painful as this might be for you this morning I want to leave you with a positive thought as we head into the weekend.  Good stocks are falling to fire-sale prices which mean there will be some amazing bargains when this is over.  For most traders, the best course of action in such high volatile times is to stand aside and protect your capital.  If you try to fight it, your money will disappear.  Better days are on the way, just be patient and wait for your edge to return.

On the Calendar

We have a light day on the Friday Economic Calendar, but it begins with the heavyweight market-moving GDP 8:30 AM report.  The consensus estimate expects a 3.3 percent annualized vs. 4.3 percent in the second quarter. The GDP price index is seen declining to 2.0 percent vs. the 3.0 last reading.  Consumer Sentiment is expected to show confidence to remains very strong with a reading of 99.0 in October.  We wrap up the calendar week with the Baker-Hughes Rig Count at 1:00 PM.

On the Earnings Calendar, there are 67 companies expected to report results.

Action Plan

With the hugely disappointing results in the big tech earnings after the bell futures are pointing to a very nasty gap down this morning.  AMZN is currently indicated to lose more than $170 a share from yesterdays close with GOOG close behind dropping nearly $70 a share.  It would seem FANG has a huge and painful cavity!

Yesterday’s 400 point Dow rally looks to be completely wiped out at the open today.  The big question now on the mind of the market; Will Thursday’s low hold as support? If not the next strong level of support is about 600 points lower in the Dow and 75 points lower in the SP-500.  The pain has spread around the world with Asian markets closing sharply lower and European markets all in the red this morning.  With a 400 point overnight reversal, expect very fast price action and the possibility of panic selling if the supports fail.  Better days are coming, and with stocks dropping to fire sale prices there will be a great opportunity when this is over.  Have a great weekend everyone.

Trade Wisely,

Doug