Morning Market Thoughts
Good morning. Last night I discussed the upward bias in the major averages, with the Nasdaq Composite at a new all-time high. What I didn’t discuss specifically is that the “FANG” stocks are all performing quite well, which reflects where money is flowing. Facebook (FB) and Amazon (AMZN) are both popping out of volatility squeezes in perfect sync…and for no particular reason that I can find in the financial news. Alphabet (GOOGL) is likely to hit a new high soon — it’s just $6 below the all-time high set on August 11th. And Netflix (NFLX), which has been lagging the other three, is pushing against the 200-day moving average.After looking at the news feed on all four stocks, the only real stories I can find that are relevant to any of these tickers basically say the same thing: “FANG stocks are being bought.” Sure, there are a couple of stray headlines, such as the fact that Amazon is going to start selling cars (yachts and planes are next, followed by trips to outer space on Virgin Galactic and trips to Mars with Elon Musk). But the big story is that these four stocks are moving.
One of the most bullish things a stock can do is break out of a consolidation phase on high volume with no news. It just breaks out. And if the consolidation phase had been built on light volume, all the better. The “newsless” breakout just…happens. The FANG stocks all have been consolidating on fairly light volume, and yesterday’s moves all occurred on relatively high volume. Nice to h ave charts to pick up that action.
With yesterday being the first trading day after the official close of summer (started on Memorial Day and ended on Labor Day), it’s almost as if the big boys returned from vacation and decided where they were going to start putting their money….and they all decided to put it in the same place. I think that’s where we should be putting our money too.
One thing that I did not mention yesterday was the rebound in oil prices. I don’t know whether the rebound will amount to much, but we need to keep an eye on it. The big energy ETFs are all in consolidation, with XLE and XOP close to breaking out. OIH still has a bit of work to do.
One last comment: In just a few hours, Apple will be unveiling the next version of its popular iPhone. The word is that the new iPhone 7 won’t have a jack and will instead require a user to have a bluetooth device. That’s fine with me, but I’d be happier if the iPhone 7 was waterproof. I’ve lost two of them due to the “User Forgot That The Device Was In Pocket of Swim Trunks” syndrome. I now have a waterproof case and a bottle of gingko biloba to remedy the situation. But the case is so bulky that it is being used as a paper weight on top of my junk pile next to the garage door, and I’ve forgotten where I put the bottle of gingko biloba.
So I’m really hoping that Tim Cook comes up with a waterproof iPhone soon. It will make my life easier
See you in the forum.
–Dan
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