FANG’s for the memories!

September 8, 20164 Comments

Facebook, Amazon, Netflix and Google are affectionately referred to as the FANG group of stocks. They, as a group, appear to be taking over the world…but not in bad way!

We at ValueTrend own Google, and we must confess that we look for entry (and sometimes exit points if we own them) on these stocks regularly. In fact, we often take a longer termed view on our holding period for these stocks- our view on Google for example is longer termed (years, not months) . Below are the charts for each of these stocks, with some thoughts as to their trends, and potential entry points may come in for new buyers.

 

Facebook (FB)

fb

FB is in an uptrend (thanks for pointing that completely obvious fact out to us, Keith!). The stock has arched off of its trendline—and it sits about 13% ahead of its 200 day MA. I tend to look for a pullback any time after a stock rises by more than 10% over its 200 day MA. This stock may be ripe for a brief pullback, given that rule of thumb. You can see on the chart that the stock has regularly found support off of its 200 day MA. Right now, that MA sits at $113, but of course that will move upward as time marches on. Watch the stock price in relationship to that MA – as/if/when it nears the 200 day MA.

 

Amazon (AMZN)

amzn

Using our rule from above, we can see that Amazon is about 15% above its 200 day MA. The stock is a little more volatile than FB, given the sideways range it got stuck in back in 2014, and then its sharp reaction to the market pullback in January of this year. These moves show us that AMZN is not quite as loyal to its 200 day MA. The stock can drop below that average. Nonetheless, I’d suggest that we watch the stock, particularly if it gets near the 200 MA. It may drop below that level  – it may not. So I’d be tempted to pay closer attention to a momentum hookup on this stock after a pullback as my entry strategy. You’ll note that the three momentum studies at the bottom of this chart are currently overbought – although only MACD suggests a potential rollover at this time. Combining MACD hooks with Stochastics hooks on the weekly chart (default settings on both) seem to be good overbought/oversold trading triggers.

 

Netflix (NFLX)

nflx

Netflix is the weaker sister in this family. It’s been consolidating for the better part of two years, with incredibly obvious support at $85. Recall that MA’s are useless in consolidation patterns (please refer to my book Sideways for more on that subject). The stock might be trying to break out of a right angled triangle at this time—but the problem with the potential breakout is it’s weak volume. For that reason, I am suspect of the legitimacy of Netflix’s near-termed potential. However, it’s worth watching. If you get some movement, and some decent volume to support it, this might be a great play. Triangle breakouts are among my favorite formations – but only if they do so on volume. This is one time you want to use my 3 & 3 rule (again, refer to my book Sideways). Look for a 3% rally off of the triangle (i.e. it stays over $95-$96/sh), and a 3-bar (in this case—3 weeks) period of sustaining above that price.

 

 

Google (GOOGL)

googl

Here is a chart that I will present at the MoneyShow next Friday. I’ve updated this chart of Google regularly for several years. The chart illustrates the principles of patterns, volume, trends, support and resistance. It also demonstrates a staircase pattern of uptrend, consolidation, then breakouts and continued uptrend. Right now, the stock looks to be breaking out of its recent consolidation pattern. However, the volume isn’t there yet to support that move. Thus, new investors might want to see if it fails, and moves back into the rectangle it was stuck in since late 2015. As noted above, we hold a position in this stock, and tend to view it within a longer termed context.

 

4 Comments

  • Hi Keith,

    Well done increasing your cash reserves! Unless the market reverses, the weekly chart will look a little broken up. Even favorites are cracking: CGX under 50, Loblaws < 200dma, Some TSX tech stock down 4-7% like OTC and ESL, Material ETF XMA on its way to its 200 dma, even transports, which looked so good recently, are down 2.5% (TFI, CNR).

    Thank god I listened to you and kept 3 years worth of cash savings in my dad's account.
    This time, I'm not buying on a puny 3% pullback, only to see it go down more. I'll be patient, and wait for strength.

    Reply
    • Good plan–my blog for Monday suggests a couple of support levels that I am watching for. I have a shopping list. For those of us with cash, this type of volatility can be quite rewarding.

      Reply
  • A big scary move down today. But breaking down through the all time high I think will be tough. I say it holds for a while yet.

    Reply

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