The selling in the large-cap "FATMAAN" stocks continued Friday morning and broadened out a little, but dip buyers went to work and have things well off the lows. Six of the seven FATMAAN stocks (Facebook (FB) , Apple (AAPL) , Tesla (TSLA) , Microsoft (MSFT) Amazon (AMZN) , Alphabet (GOOGL) , Netflix (NFLX) ) are now positive, although market breadth is running around 2,200 gainers to 4,975 decliners.
Unlike Thursday, the selling has spilled over into small-caps and that is hurting breadth although there seems to be some good support.
Overall this is just some very healthy and routine corrective action after a good run. Many stocks have become not only extended by downright frothy. It is healthy that stocks such as Tesla and Apple actually make people consider the fact that they may not go straight up forever.
Next week we will have a slew of earnings reports including Apple and Alphabet on Thursday. After the "sell the news" reaction to Microsoft and Tesla there may be more skepticism in front of the reports, which would help avoid a repeat of what we saw Thursday when the Nasdaq 100 ( (QQQ) ETF) was hit hard.
So far the Russell 2000 ETF (IWM) is holding above its 200-day simple moving average but it is struggling and the selling is more correlated.
My game plan is to do some dip buying but I'm not moving too quickly. A couple of names that I've been buying on weakness are Inseego (INSG) , Personalis (PSNL) , and Myovant Sciences (MYOV) but I'm leading plenty of room for additions.
It is important to play defense and not give back too much as this corrective action takes place. However, this is not looking like a major top just yet. There should be some good opportunities developing as this corrective action plays out.