Facebook, Amazon and Alphabet, a collective $2.3 trillion in market cap, are reporting in the coming week.
Craig Johnson, chief market technician at Piper Jaffray, says after a massive runup, earnings could be the catalyst that kicks off a temporary pullback.
"Clearly this has been among the best performing areas in the market year to date. And every single one of those names except for Google has been outperforming the S&P 500," Johnson said on CNBC's "Trading Nation" on Thursday. "We could see some correction in these names, but again the longer-term trend is still up for them."
Facebook has surged 53% this year, the best performer of the four, followed by Amazon and Netflix, which have both increased by double digits. The outlier, Alphabet, has added just 9%.
"If you switch gears and you take a look at an equally weighted index of these FANG stocks… four times, and this is now the fifth time we've tried to break out here on this index, and we're not seeing this equally weighted index breaking out to new highs," said Johnson.
"That sets up a little bit of a question mark for the bigger market outlook picture given how narrow the breadth of this market has been and how dependent it is going to be upon these FANG stocks continuing to move higher," he said.
Johnson adds that Facebook and Amazon are the ones to watch heading into their earnings reports on Wednesday and Thursday, respectively. However, he says Apple is the tech stock with the most constructive technical set-up at the moment – it reports on July 30.
Netflix, the first FANG name to report, tanked more than 10% on Thursday after its first drop in U.S. subscribers in eight years. The streaming stock's decline weighed on the rest of the tech space.
Quint Tatro, founder of Joule Financial, says this presents an opportunity.
"Netflix really has a unique metric that is going to be under scrutiny, I think going forward for a very long time, which is subscriber growth," said Tatro. "Why is that an opportunity? Because the other names in FANG ... are definitely economically dependent. They're not just going to be dependent on subscriber growth. They're going to be the backdrop of what's going on in the economy, which is still strong."
Analysts anticipate Amazon will have the best earnings growth over its quarter, up 10%, followed by a 7% increase for Facebook, according to FactSet. Alphabet is expected to report a 5% drop in quarterly profit.
"I think weakness going into those reports is an opportunity, and I would be surprised if we saw big blowups like we're seeing in Netflix," said Tatro.
