The conventional wisdom at the end of last week was that we were witnessing a rotation out of tech shares and into financials and small cap stocks.
In other words, nothing to get  too concerned about. Apple (AAPL) was a special case as surveys of retail channels showed weak sales for the iPhone 8.
Today, though, the concern is a bit more serious.
Shares of Apple continued to sell off–the stock was down 0.88% to $150.55 today–and it was taking shares of iPhone suppliers with it on reports that Apple was cutting back on orders from suppliers for the iPhone8.
But the sell off has broadened to include just about all of the tech sector–and some of these stocks are threatening to break below significant technical support.
In today’s trading Microsoft (MSFT) was down 1.54%; Facebook was down a big 4.5%; Amazon (AMZN) was lower by 1.6%; Alphabet (GOOG) fell 0.81%; Nvidia (NVDA) plunged 4.47%; Tesla (TSLA) declined 1.74%; Netflix (NFLX) dropped 4.7%; and Adobe (ADBE) was lower by 2.65%.
The Technology Select Sector SPDR ETF (XLK) ended the day down 1.16%.
What raises the level of worry for these stocks is that today’s selling has taken several of the biggest market leaders of 2017 below technical support at their 50-day moving averages. For example, Facebook today broke below its support at $169.12 to close at $162.87. Tesla, to look at another instance, fell to $344.99 today, below the 50-day moving average at $350.21.
Looking at their charts, technically inclined money managers and individual investors are likely to notice the because these stocks have moved up so far, so fast, the next levels of support can be quite a bit lower than current levels. Facebook’s 200-day support is at $146.95, for example. That’s $15 dollars a share below today’s close. Tesla’s 200-day moving average stands at $301.28, way below the close today at $344.99.
Many of these stocks have a lot of support from momentum investors–but a smart momentum investor sells when the upward momentum stops. That’s now the danger facing many tech stocks. Â (A better than expected earnings season for the sector would help restore faith among momentum investors. With Apple looking at disappointing iPhone 8 sales, though, you’ve got to wonder about the odds of that.)
