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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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Saturday, January 22, 2022

TECHNOLOGY SECTOR: Approaching Terminal Velocity

* See UPDATE below...

I last wrote about FNGU (an exchange-traded note that tracks 3x the daily price movement on an index of US-listed technology and consumer discretionary companies) in my post of December 20, 2021.

As you can see from the following monthly chart, it failed to recapture and hold above the 33.00 level, mentioned therein, and closed at 25.74 on Friday.

It's approaching a price support zone from 20.00 to 25.00. We may see it attempt to stabilize somewhere within this zone in the coming days.

If not, a drop and hold below 20.00 could be catastrophic for the Technology Sector.

The ten stocks that make up FNGU are shown on the following 1-year daily charts.

Most of them are at or near price support, with the exception of TWTR, which is well below for the year.

The following daily ratio chart of the NDX:VXN ratio shows that a bearish moving average Death Cross formed several days ago, and price has fallen below major support of 500.

I noted in my post of January 21 that a Death Cross had also formed on the SPX:VIX ratio and that the 'sell the rip' traders had overtaken the 'buy the dippers.' The same is true for this ratio.

If the NDX:VXN drops and holds below 400, its next major support level sits at 300, followed by 250 and 200, respectively.

In conclusion, if FNGU falls and holds below 25.00, and if the NDX:VIX ratio falls and holds below 400, and if the ten FNGU stocks fall and hold below their near-term price support levels, I wouldn't be surprised to see FNGU retest the lower edge of its support zone at 20.00.

A drop and hold below 20.00 on FNGU and below 300 on the NDX:VXN ratio could be catastrophic for the Technology Sector.

Keep an eye on the price action and support levels on the SPX and SPX:VIX ratio described in the aforementioned post for possible corroborating clues in this regard.

* UPDATE February 2...

Apparently TWTR has been replaced by MSFT in the FNGU ETN basket of stocks. The following revised one-year daily chartgrid of FNGU and its 10 stocks incorporates this update.