Big Tech Under the Microscope and Under Pressure Could Upend Markets

Shah Gilani|July 24, 2020

So far, it’s been a mixed bag for tech earnings this quarter, at least as far as their reported metrics.

What hasn’t been mixed however is how investors have decidedly been selling big tech names, including selling Netflix down on less than expected subscriber growth and selling Microsoft on excellent earnings metrics, except for slower growth in its cloud business, if you can call 43% growth slow.

Something’s bothering Big Tech investors.

Maybe it’s how fast and furiously big tech names rallied off their March coronavirus crisis lows. Maybe it’s because most mega-cap tech darlings made new all-time highs. Maybe it’s because of this Monday’s House Judiciary Antitrust Subcommittee virtual hearing the CEOs of Apple, Amazon, Facebook, and Google face. Or maybe it’s nervousness over Facebook reporting earnings on Wednesday next week, then Amazon, Google, and Apple reporting on Thursday.

Whatever it is, it’s not looking good for big tech darlings right now.

The bottom-line is: if Big Tech falters the rest of the market’s headed lower, maybe a lot lower and maybe quickly.

What Comes First

Of course, we’re not there yet.

It’s been an ugly and volatile couple of weeks for tech stocks, especially the FAANGs and Microsoft.

In what might be called a New Your minute, Facebook’s down more than 9% from its just minted all-time highs. It’s now got support at $225 it needs to stay above, or it risks further profit-taking.

Apple, which reports earnings on July 30, next week, and rose more than 75% off its March lows to make new all-time highs, is suddenly almost 8% lower. Apple’s got support around $350. It needs to hold near there or it’s going to see more profit taking too.

Amazon’s spectacular 106% rise off its lows to new all-time highs, was just followed by the stock falling almost 13% in the last two weeks. Amazon, which reports on Thursday better report stellar earnings or it could see fast and furious selling down to $2800 where it has some support.

Netflix is down 18% from its all-time highs a couple of weeks ago and has to hold $450, or it’s in trouble.

Google’s earnings aren’t supposed to be great, but it can still beat consensus estimates, and it better if it doesn’t want to see its stock, already down 6% from its highs, fall to $1500 and face further pressure.

And my favorite stock, Microsoft, which is already down more than 8% from its just made all-time highs, better be able to hold $200, or it’s going to see more selling.

It Could Get Better or It Could Get Worse, Much Worse

Next week’s going to be a HUGE week for Big Cap tech darlings.

It better be a good week, otherwise based on how tech’s been trading the last two weeks, it could be a really bad week.

If it’s going to be a bad week for tech, the rest of the market’s going to suffer even more.

I’ll be back first thing next week with updates, hopefully good, but if now, we’re in for a storm.

Prepare accordingly.

Until then,

Shah