Netflix Inc. is getting killed at the stock market box office.
After a dismal 5.5% drop on Monday, the stock joined Facebook Inc. and Alphabet Inc. (parent of Google) in falling into a troubling “death cross” stock price trend. The celebrated entertainment and tech brand is down almost 35% since July!
This is the first time investors have seen a “death cross” for Netflix since 2016.
But Netflix is not alone.
The Nasdaq Composite index as a whole is close to a death cross of its own. This is the worst selloff for tech in nearly 3 years.
The Dow Jones Index is also crushed: down 7% since mid-October alone.
The so-called FAANG stocks are the bellwethers of the technology industry, and they’re all hurting.
For Google, this is the first bear market for its stock in seven years. Even Apple is flirting with bear market territory. Amazon could hit a death cross this year.
This is why analysts at Scotiabank are seeing increased interest in gold as a safe-haven from the storm.
“Gold has turned more favorable as other markets have started to become more risk-averse. There is room for more safe-haven demand for gold.” – Scotiabank
Nobody wants a repeat of watching their stocks drop 40%+ like they did in 2008.
“Economic data has generally been showing weakness, including some U.S. data, and economic bellwethers have remained under pressure as the U.S. trade disputes have dragged on,” the bank’s analysts recently wrote. “Gold has turned more favorable.”
“You can’t hear the fat lady singing just yet but if you listen closely, you can hear her warming up in the background,” says Michael Arone, chief investment strategist at State Greet Global Advisors. He thinks the banner run for stocks may be screeching to a halt very soon.
WHAT IS THE DEATH CROSS?
When a stock price chart’s 50-day moving average crosses below its 200-day moving average, you have what is known as a “death cross.” This is where Netflix just hit.
Moving averages help analysts smooth out the day to day market swings. That allows you to get a more long-term view on where a stock is headed.
If the price of a stock is moving up over the course of a month or two, the short term 50-day moving average price will generally outpace the 200-day average.
However, if the 200-day moving average moves above the 50-day moving average, many technical analysts regard this as a red flag that a stock could be entering a long-term downtrend. They really notice now, especially after 10 years of up-trending stock markets and seeming unstoppable highs for high-flying tech darlings.
No wonder safe havens like gold and silver are seeing so much press attention right now.
“The fact that investors have revisited gold as a major safe haven will keep it to top of mind as the year ends,” said Alfonso Esparza, senior market analyst at Oanda.
What’s going on with our stock market?
Geo-political worries over Brexit and what could happen
The worsening U.S.-China trade dispute
Political acrimony in the U.S. and changing power dynamics
U.S. home builder confidence is the worst since 2014
Rates are rising, hurting debt-overloaded consumers and mortgage holders
Inflation is showing in every sector of the economy and labor is scarce
Natural disasters are impacting national growth
And these are just the items I can list off the top of my head.
We aren’t market timers here. Only you can decide what is right for you, once you have all the facts.
We don’t want to worry about the direction of specific stocks: we’d rather think about how diversified your whole portfolio is.
All the doom and gloom above could turn out to be completely wrong, of course. But would you bank your ENTIRE retirement on a rosier future?
If the information above gives you reason for concern, then it is time to think about diversifying with precious metals now – just in case the market downturn turns into a market rout.
Just one more excellent reason to keep a close eye on your nest egg.
Don’t you agree?
DON’T FORGET ABOUT SILVER
There has been a lot of focus on precious metals recently. Curiously, most of it has centered on physical gold. Let this be to your advantage: physical silver is also well worth considering!
Silver has the same diversification and safe-haven asset benefits as gold. It is also a highly-sought after component for industrial applications like conductors.
Silver is a kind of economic “canary in a coal mine,” as the recent slowdown in global economic growth has resulted in slower demand in 2018 for silver too.
But Scotiabank thinks silver could actually outpace gold prices in the months ahead.
“Should gold prices extend gains and investor interest return, then silver would likely outperform gold’s rebound in percentage terms,” Scotiabank analysts said.
Either way, the diversification benefits alone make silver a great possible companion to gold. Many retirement investors hold both physical gold and silver in their Gold IRAs.
Have you considered both for your own portfolio?.
TIME TO GIVE PRECIOUS METALS A FRESH LOOK
If you’ve been considering gold and silver, now could be the best time in years to take another look.
Gold and silver have been in the news, but they haven’t captured the really big headlines. That has been saved for big players like Apple, which are struggling to grow around the world when the global economy is clearly drying up quickly.