Nvidia, Apple, And Microsoft May Face Potential Correction, Warns Expert, Points At Concerning Chart Patterns For 'Magnificent Seven' Stocks

The stock market may be on the brink of a significant correction, according to a leading market expert. Craig Johnson, the chief market technician at Piper Sandler, has issued a warning about the future of the “Magnificent Seven” stocks.

What Happened: Johnson, in a recent appearance on CNBC’s Last Call, raised concerns about the future of the Magnificent Seven companies, which includes Microsoft Corp. MSFT, Apple Inc. AAPL, NVIDIA Corp. NVDA, Meta Platforms Inc. META, Tesla Inc. TSLA, Amazon.com Inc. AMZN, and Alphabet Inc. GOOG GOOGL.

Johnson highlighted concerning patterns in the stock charts, including lower highs in Nvidia and a gap down in Apple and Microsoft. “These charts are rolling over, and they need to correct further,” he said.

He also expressed skepticism about the potential for small-cap stocks to continue outperforming large-cap stocks, a trend seen in 1984, 2002, and 2003.

"Are the Mag 7 breaking down?" asks @SullyCNBC.

"Yes," says @Piper_Sandler's Craig Johnson. "These charts are rolling over, and they need to correct further." $AAPL $MSFT $NVDA pic.twitter.com/lmRDHmOA55

— Last Call (@LastCallCNBC) July 17, 2024

See Also: Trump Says Taiwan Should Pay For Its Defense To US, But If China Invades Taipei, It Will Be ‘Catastrophic’ For American Economy, Says Analyst: ‘It’s Dark And It’s High Stakes’

Why It Matters: Johnson’s warning comes amid a series of events that have raised concerns about the stability of the stock market. In June, he pointed out several “warning flags” in the market, suggesting a potential market pullback, despite the historic performance of the SPDR S&P 500 ETF Trust‘s SPY in 2024.

Meanwhile, Cathie Wood, the CEO of ARK Invest, has predicted a potential shift in the equity market, favoring small-cap stocks over large-cap tech companies due to the current “restrictive” monetary policy of the Federal Reserve.

On the other hand, Nvidia and other semiconductor stocks have been affected by the U.S.’s intensified semiconductor sanctions against China, raising concerns about the future of the tech industry.

Small-cap stocks have been on a remarkable streak. The iShares Russell 2000 ETF IWM surged over 1.9% this week, driven by speculation about rate cuts following lower-than-expected June inflation data.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote