FINANCIAL WARNING: Does this shock chart show a huge crash is to hit US stock markets? – Express.co.uk

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The Nasdaq stock index has hit record highs in recent weeks propelled by the soaring share prices of tech companies.

But fears are growing that many firms are in a bubble, with investors hitting the brakes and sending share prices down for some of the biggest internet giants in recent weeks.

For the first time in eight months the Nasdaq has now seen a negative monthly performance, creating a red candlestick formation on the graph below.

This is worse than it first appears, experts have suggested, because a separate measure shows that stocks are currently overbought.

Any reading above between 70-80 on the so-called Relative Strength Index (RSI) means a sell-off could be on the horizon – with the measure currently around 74.02.

Fawad Razaqzada, technical analyst at Forex.com warned investors should be ready for increased volatility.

He said: “If tech stocks do sell-off again then the tech-heavy Nasdaq 100 could be the index to watch/trade, for the Dow and to a lesser degree the S&P 500 are supported for now by the outperformance in the banking and energy sectors, owing to rising yields and firmer oil prices.

“The higher borrowing costs are seen as being negative for sectors such as technology as it raises their borrowing costs, and could hit consumer demand.

“The Nasdaq 100 may have already created a possible reversal formation on its monthly chart, forming its first red candlestick formation in eight months.”

Mr Razaqzada added: “Technically this is more bearish when you consider the monthly RSI being not only overbought but in a state of negative divergence – so the momentum indicator has made a lower high relative to the underlying Nasdaq 100 index.

“This divergence is typically found at major tops, and the higher the time frame the more significant it becomes.”

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