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Actionable news in QQQ: PowerShares QQQ Trust, Series 1,

FANG Stocks Dragging Markets Down? Here's How to Trade Overbought Averages

Negative reactions to earnings from FANG stocks Netflix (NFLX - Get Report) and Alphabet (GOOGL) prevented the Nasdaq and Nasdaq 100 from challenging price gaps to their trading lows of Dec. 31, and both closed down slightly last week.

With the five major equity averages showing overbought conditions on their weekly charts, the focus remains on daily charts and their Fibonacci Retracements.

Here's how to trade these averages using ETFs.

The Dow Jones Industrial Average (INDU) can be traded using the SPDR Dow Jones Industrial Average ETF (DIA) , a.k.a. Diamonds.

Must Read: 7 Stocks Seeing Big Trading Volume -- and What You Should Do With Them Now

The S&P 500 (^GSPC) can be traded using the SPDR S&P 500 ETF Trust (SPY) , a.k.a. Spiders.

The Nasdaq Composite (NDAQ) is best traded using the ETF that represents the Nasdaq 100, the PowerShares QQQ Trust ETF (QQQ) , known as QQQs.

The Dow Jones Transportation Average (^DJT) can be traded using the iShares Transportation Average ETF (IYT) .

The Russell 2000 can be traded using the iShares Russell 2000 ETF (IWM) .

Here are the daily charts and trading levels for the five stock market ETFs.

Dow Diamonds

Courtesy of MetaStock Xenith

The daily chart for Diamonds ($179.90 on Friday) shows the Fibonacci Retracement from the May 20 all-time high of $183.35 and the Aug. 24 low of $150.57. The key levels to hold on weakness are the 200-day simple moving average (in green) at $171.13 and the 61.8% retracement of $170.79.

Investors looking to buy Diamonds should consider doing so on weakness to $165.07, which is a key level on technical charts until the end of April.

Investors looking to reduce holdings should do so on strength to $182.24, which is a key levels...


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