Want to see what the former high fliers are doing? Some are flying high…some are not. Here’s my take on the FANG stocks. (June 17, 2016)
FB AMZN NFLX GOOGL AAPL
Today I want to look at FANG, that’s Facebook ( NASDAQ:FB ), Amazon ( NASDAQ:AMZN ), Netflix ( NASDAQ:NFLX ), and Google, or Alphabet ( NASDAQ:GOOGL ). By the way, I’m writing an article for RealMoney.com on this very thing, but I always prefer to do things on video because you can explain more and it actually doesn’t take as long. So I’m looking at these and if the market is really going to peak and we’re going to be kind of done with the bull market, we’re going to see these stocks start to rollover; because they’ve BEEN leading stocks. And like Facebook ( NASDAQ:FB ) here, it’s got a P/E of 43. Alright, that’s more than twice what the S&P is, but it’s Facebook ( NASDAQ:FB ). I’d say it’s kind of got a high growth rate, at 50 percent, that’s greater than most.
So what I’m saying is, just from a fundamental standpoint, this is fine. But if the growth rate starts to tail off then suddenly that P/E, remember it’s price over earnings, so if earnings start to decline or the growth rate is just not as high, you’re going to see this start to rollover in a hurry. So far we look at the weekly chart, I’m not really seeing that yet, it just kind of feels heavy. I almost think that it’s because the rest of the market has been so sluggish and sloppy that you’re thinking, “Well, for crying out loud, at least Facebook can work. Seriously, can somebody throw me a bone?” And so far the 200-day or this 40- week moving average is holding, but it is trading kind of sloppy and it’s concerning that the stock came out of a volatility squeeze.
I like to see these squeezes happen. I really like to see them happen close to the 50-day moving average. And I REALLY like to see them happen close to the 50-day moving average that’s close to the 200-day moving average. That’s what tends to happen. We’re not getting that. We’re kind of getting a little bit of the opposite. So I would just say this, as long as Facebook ( NASDAQ:FB ) continues to trade above the 200-day moving average, then I think you’re good on this. Would I buy it here? No, because this line that I drew is an important line to me. These are the buying points, right here, at the 200-day moving average. My bet is, this is going to fall back enough to test that key moving average.
Now Amazon ( NASDAQ:AMZN ). If we zoom in here it looks like the wheels are close to coming off the wagon again. Again, volatility squeeze just like we saw on Facebook ( NASDAQ:FB ). But then if we zoom out you can see, on a longer-term perspective, this stock just keeps going and going and going. But look at all the price action here. And then now look and see what’s happening here. Does it seem like this stock can just blastoff? Not to me. I see this big move here, and then I see the retracement. And now I see this stock kind of faltering a little bit. So we look at the daily chart, I think it can at least come down to 680.00, that’s another 20 points. And by the way, on a percentage basis, it’s not that big a deal. But with the market the way it is, Amazon ( NASDAQ:AMZN ) NOT moving to new highs. Earnings NOT for another month and a half; I think this stock can move lower. I don’t think there’s anything technically wrong with it, but it’s not a stock that I would buy right here. If you’re a longer-term holder, great! Good for you. I hope the definition of long-term is 5 years, you’ve got a lot of money coming. But if you’re looking to buy this I think you’re kind of hoping right now.
Okay, Netflix ( NASDAQ:NFLX ). Man, this is not showing me any love at all. You look at the weekly chart, it looks a little double toppy but the stock is trading lower. The weekly chart looks sloppy. The daily chart looks sloppy. This one that I would stay away from and note that earnings are in about a month, THAT will move the stock, it always does one way or another.
And then finally Google ( NASDAQ:GOOGL ). This is really sloppy, $700.00. If this cracks $700.00 I think you can get substantial downside here. So Google ( NASDAQ:GOOGL ) is one that I would stay away from. Even if it rebounded keep in mind that it’s a $700.00 stock and it’s only less than 4 percent BELOW where really this resistance would be. So, “Oh my gosh! It moved $15.00.” Yes, but it’s a $700.00 stock. Just stay away from this.
I guess I can do one more, it’s FANGA; Apple ( NASDAQ:AAPL ). Just noting that this continues it’s downtrend and if you’re holding you’re hoping. And that’s all I’m going to say about that.
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