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Tech Stocks Slammed Last Week: How Scary Is This Market?

Courtesy of Pam Martens

Amazon Stock Price Chart Since 2002

Amazon Stock Price Chart Since 2002

By Pam Martens and Russ Martens

Mark this date on your calendar: Friday, June 9, 2017. That’s the date that the big downward move in the largest tech stocks began. The day also saw a rotation into big bank stocks (which is like swapping a land mine for a hand grenade — there’s going to be an explosion, it’s just a matter of degree).

The selloff on Friday was triggered by a research report from Robert Boroujerdi of Goldman Sachs. The report compared today’s FAAMG tech stocks (Facebook, Apple, Amazon, Microsoft and Google-parent Alphabet) to the highfliers in the tech bubble that crashed in 2000: Microsoft, Cisco, Intel, Oracle and Lucent.

Boroujerdi used a lexicon that the market did not want to hear: “death,” “extremes,” and “difficult to decipher risk narratives.” The exact sentence went like this:

“This outperformance, driven by secular growth and the death of the reflation narrative, has created positioning extremes, factor crowding and difficult-to-decipher risk narratives (e.g. FAAMG’s realized volatility is now below that of Staples and Utilities).

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