Divergent Paths

The big day for earnings came and went with big tech companies surprising analysts. Investors waited until late in the day to jump in, but when they did the effect erased the effect of profit taking traders early in today's session.

Read in Browser   Chart Advisor | Focus on the Price By Gordon Scott, CMT Friday, July 31, 2020 1. Markets surge late to follow big tech trends 2. Alphabet showing bearish divergence 3. Gold and silver continue bullish trends Market Moves The big day for earnings came and went with big tech companies surprising analysts. Investors waited until late in the day to jump in, but when they did the result erased the effect of profit taking traders early in today's session. Even so, the big four tech companies that reported yesterday: Facebook (FB), Amazon (AMZN), Alphabet (GOOGL), and Apple (AAPL), are showing a starkly stronger price pattern than the rest of the market.   The chart below shows how these big companies, on average, are pulling away from various asset classes. This chart compares an equal-weighted portfolio of these four stocks to Invesco's Nasdaq 100 ETF (QQQ), State Street's large cap (SPY) and mid cap (MDY) index ETFs, and iShares Russell 2000 index ETF (IWM). The big question here is just how long can this go on? Seeing investor money concentrate into a small number of stocks is usually a bad sign for bullish trends.     Alphabet Showing Bearish Divergence Of the four stocks reporting yesterday, one shows a particular appearance of weakness. At one point in the day Alphabet shares were below the longer term trend line. Like the rest of the market, shares of GOOGL rebounded to close near where they opened.   The chart below shows just how vulnerable this stock is to losing its upward trend. The Commodity Channel Index (CCI) indicator is shown as an example of one price-based oscillating indicator that shows a bearish divergence on this chart. In fact, most such oscillator studies will show some version of this same story. If GOOGL shares fail to regain a new high any time in the next two weeks, then the price will likely close below the trend line established since the March lows.       Read more: Commodity Channel Index - CCI Definition and Uses Alphabet (GOOGL) Sells Off After Revenue Decline Qualcomm Rockets to All-Time High on Huawei Settlement SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. LEARN MORE  > Gold and Silver Continue Bullish Trends The relentless rise in stocks and commodities driven by investors hungry for outperforming returns has been nothing short of breathtaking. The chart below shows the rapid ascent of State Street's gold price index ETF (GLD). The recent ten percent gain in price is highly unusual for this commodity. It seems unlikely that this trend can continue at this pace. However, just one year ago even the Fed was saying they had no intent to change interest rates for all of 2020, and investors thought it seemed unlikely that interest rate drops were in the future.     The Bottom Line Stocks started off with selling activity, but by the end of the session today were back up to where they started. Among the big tech companies that reported earnings yesterday, Alphabet seems vulnerable to being sold off. The price of gold just keeps rising, even though its pace is unusually steep for now. Want more Investopedia market news?   Sign Up for 'The Market Sum' Editor in Chief, Caleb Silver is here to you help you digest the days market moving events at the close of the bell. Subscribe » How can we improve the Chart Advisor? Tell us at chartadvisor@investopedia.com CONNECT WITH INVESTOPEDIA Email sent to:  mondemand.forex@blogger.com If you wish to update your newsletter preferences or unsubscribe, please click here   114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC. All Rights Reserved | Privacy Policy