Tech sell-off continues, Netflix drops 20% on earnings

What looked like the beginning of a recovery rally, quickly turned out to be another dead cat bounce. In spite of US indices gaining slightly at the beginning of yesterday’s Wall Street session, moods quickly deteriorated and US stocks took another hit. There are a few reasons that have contributed to the drop in equity markets

Continued pick-up in US yields and growing risk of Fed removing excess liquidity

Netflix (NFLX.US) plunged 20% in after-hours trading as Q4 2021 subscriber figures disappointed and forecast for Q1 2022 was seen as unambitious

Cryptocurrencies joined tech sell-off with Bitcoin dropping below $40,000

A large number of single stock option contracts expires today what may have forced dealers to hedge positions and in turn magnify recent moves in the markets

Taking a look at the Nasdaq-100 (US100) chart, we can see that the index plunged below the psychological 15,000 pts area and continues to move lower. Index broke below the lower limit of the Overbalance structure at 14,975 pts and 200-session moving average (purple line), signalling that more weakness may be ahead. The next support zone to watch can be found at the 23.6% retracement of the post-pandemic recovery move in the 14,420 pts area.