Stocks just hit a brick wall. Do this…

Stocks just hit a brick wall. Do this…

Get Justin's Trade Alert Every Week

Teams don’t typically win games when their best players are out.

It’s the same with stocks.

When the best stocks aren’t doing well, the market tends to struggle.

I mention this because the world’s biggest, most important stocks just ran into a brick wall.

Take a look at the equal-weighted NYSE Fang Plus Index, which tracks 10 stocks including Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), and Alphabet (GOOG).

It went on a heck of a run, more than doubling between November and July. It even hit new all-time highs.

But it couldn’t hold that level...

Source: StockCharts

In trader speak, the Fang Plus Index had a “false breakout.” And false moves like this often lead to powerful moves in the opposite direction.

In other words, we could see a deep correction in America’s biggest stocks. That would clearly be a problem if you own those stocks. It would also be a problem for the broader market.

Most of the stocks in the Fang Plus Index are technology stocks. And “tech” is by far the most important sector. It makes up 27% of the S&P 500 and more than 50% of the Nasdaq 100.

In other words, a pullback in these leaders would weigh heavily on the indices. But that doesn’t mean it will be impossible to make money.

Remember, there’s always a bull market somewhere. Last year, the indices were under severe pressure but energy stocks still rallied 66%. I recommended energy stocks in Feb 2022, and I like them again today.

So, consider increasing your allocation to energy stocks if you haven’t yet.

On August 1, I explained why I’m bullish on the Global X Uranium ETF (URA), and I remain very bullish on this group.

Source: StockCharts

I’m also bullish on the Energy Sector ETF (XLE) as a “one-click” way to profit off energy stocks in the current environment.

Justin Spittler
Chief Trader, RiskHedge

Suggested Reading...

Click here to upgrade & get Justin's premium trades


Guidance on


Join our community and get in on the discussion

Keep up with RiskHedge on the go.

Download the App

Scan it with your Phone