CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Is the sell-off over for US tech stocks?

Friday saw a sell-off start for US tech stocks, sending the Nasdaq sharply lower. However, given the overall uptrend, is this a good buying opportunity?

IG Analyst

Publication date : 2017-06-13T15:57:09+0100

German stock exchange

Source: Bloomberg

The Nasdaq has sold off sharply over the past two days, yet there are signs that this represents a good buying opportunity rather than something to be worried about for now. Looking at the weekly timeframe, we have not created a lower low for seven months now, with the break lower in November 2016 being only a fleeting move before the market moved higher once more.

The sell-off we have seen since Friday has taken the price back down to trendline and 50-day simple moving average (SMA) support. That moving average worked well as support twice before when the price moved back into it. Alongside that, we can see that the previous two candles have long lower shadows, which is often a sign that there is not enough emphasis to maintain the current rate of decline. Looking at the stochastic oscillator, it is also notable that the indicator has moved into an important support zone which has previously seen the market turn higher. Given the wider downtrend in play, it makes sense to remain bullish on this market, unless we see the price break below the 5547 mark. As such, a bullish break higher is expected from here, with the recent sell-off simply looking like a buying opportunity. A break below 5547 would negate this view.

Nasdaq chart

Nasdaq chart

Nasdaq chart

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