FANG stocks (Facebook, Apple/Amazon, Netflix, Google) have been market leaders for the past few years. There was nothing any of them could do that would go wrong. However, you have to keep an eye on these market darlings. Things can change – As noted in a few of my recent blogs, it is my opinion that the market is becoming more of a stock pickers market. Rotation is key. You can see this in the overbought pullbacks on these stocks. You must select the best candidates amongst the group if you are going to own this type of stock—some are overbought at this moment..
With that in mind, let’s look at the weekly charts of these 5 stocks with an emphasis on longer termed trends. Key point: an uptrend is defined by higher highs, higher lows and maintenance over the 200 day (40 week) SMA. A stock too far over its 40 week SMA (> 10% over) might be a pullback candidate. I discuss this set of basic rules regularly through this blog, and in my book Sideways.
Facebook can have a bit more chop to its trend than some of its FANG counterparts. But, from our rule-based system, you can see that it’s above its trendline, and hasn’t put in a lower low yet. It has cracked its 40 week SMA. Remember, it is still on trend until BOTH a lower low AND a crack of the 40 week SMA are in place. The fact that it is testing a multi-year trendline might indicate that a buying opportunity is approaching. I’d like to see a move back over the 200 day SMA first, though. Its break would be a note of caution, but not yet a game-changer.
Apple is above its primary trend and its 2 –year trendline. Its overbought, according to my “10% + over the 200 day SMA” rule. The stock is currently trading around $216 vs. its 40 week SMA at $180. Typically, I have found that a stock won’t stay above its 40 week/200 day MA by more than 10% for more than a couple of months or so – unless we are in a parabolic market like 2017. I don’t think we are in that environment this year – so my thoughts are for a healthy pullback on this stock in the next little while . That would likely be a buying opportunity.
This stock is overbought – it is trading at $1870 vs. its 40 week SMA at $1523. It’s well off of its primary and secondary trendline. Nothing wrong with the trend at all here, but it may need to pull back a bit. Again, a buying opportunity if that happens.
Netflix is a choppy, but bullish chart. It’s over its trendline and above its last high. Its testing its 40 week SMA at this time. You can see where I put a couple of arrows on the chart. They show you where the stock went 30% or more over its 40 week SMA recently. The stock recently hit that level (31% over the SMA) and is now correcting – which is good. Technically, this is positive and may be soon offering a new entry point.
Google is in an uptrend as evidenced by its adherence to the trendline, the continued appearance of higher peaks and troughs, and its maintenance of the 40 week SMA. It’s pulling back a bit in light of the rhythm of its peak/troughs within the trend. Stocks in an uptrend tend to correct with regularity. This is to be expected. Any bounce off of the trendline or moving average would likely be a buying opportunity.
Keith on BNN this Friday August 24th at noon
I was just about to add to add to Apple until I saw this post and the apple chart. I added a bit to Facebook after their earnings release drop. Now I’ll wait for apple to sell off a bit. What are your thoughts on gold. Some are saying it’s forming some kind of base
Gold has been forming a base for about the past 1000 years (my dad told me a billion times, “keith, stop exaggerating”)
Ok, well, perhaps not 1000 years–but its been basing since 2013. Currently it is in a short termed downtrend within the bigger base. Seasonals tend to be ok for the sector July until October – but that doesn’t seem to be helping this year.. I’d avoid –too many other better prospects out there. See my blog today for ideas (Aug 23).