There’s one thing that happens seasonally right around now.
Even Cramer is straightforward about this on Mad Money this time of the year.
If you’ve been following the markets at all this year, you’ll know that the “FANG” stocks have been responsible for a majority of the gains in the market.
In case you are’t familiar, FANG = $FB $AAPL $NFLX $GOOG
Some have added another A (as they should) for $AMZN…so FAANG now I guess.
Other acronyms have been suggested. But that’s irrelevant here’s the point.
If a hedge fund is out-performing the benchmark indices going into Q4, they take profits. Why not? Their whole goal is to outperform the S&P 500 for most of their investors. So if they already have by Q3 going into Q4 (which is what we’re in now)…they take profits and just chill for a while unless markets make some unexpected move they need to hedge against or trade with.
So this tech sell-off I wouldn’t say is anything beyond profit-taking. FAANG has outperformed the. market all year until a few weeks ago. They’re taking money own. Meaning if you own equity, don’t panic sell it. Also, for my option traders…..don’t bet against these names anymore. Unless you’re using a covered/selling income strategy.
How do you stay profitable here? Patience. Now is not the time for weeklies unless it is for day-trade purposes. Even then, you need to have a lot of time in the game to even know when to trade those.