Don Vialoux notes on his blog that seasonal influences can be magnified during mid-term elections. I might add my own observations unique for this year—that is the influence the current trade talks. Markets might see lots of uncertainty for as trade wars escalate over the scary months of September and/or October – which are the traditional “danger” months. For this reason, we did some rotation into a few ‘value” stocks in our ValueTrend Equity Platform last week – and raised our cash slightly over 20% in the process. Our gross performance results to the end of August are posted here – clients were recently shown that their net performance has been achieving market beating performance while maintaining a healthy dose of cash. Low risk, solid performance – resulting from disciplined management.
Today, I thought I would briefly look at the FANG stocks. It seems that the social media stocks are suffering from fears of new regulation. So too is Netflix as it struggles to deal with oncoming competition and potential new growth. But the untouchables, namely Apple and Amazon, have maintained an overbought status in the group. My observations: opportunities will arrive after the underperformers base and show technical turnarounds. Further opportunities will arrive when the overbought “A’s” (Amazon and Apple) decline to a more manageable point on their trend lines. Here are the charts with very brief comments:
Twitter isn’t part of the FANG’s – but it’s a well followed social media stock. The stock just broke its 200 day (40 week) SMA while breaking its mid-termed trendline. The top of its old base was in the low $20’s, and it may just drop into that general price zone before finding support.
The first of the FANG’s, Facebook has broken its 200 day SMA, although its last low of around $50 hasn’t broken yet. Thus, the trend remains in place – for now. Keep an eye – if the stock breaks its prior low, its in trouble. If it holds, soon will be a buying point.
Apple’s stock price is about 18% over its 200 day SMA. My rule of thumb is for around 10% over the 200 day SMA before calling it overbought. Time for a healthy pullback. China trade talks may cause enough fear to pull this stock back to a reasonable point on its trendline.
Amazon is about 22% ahead of its 200 day SMA. So, the story is like that of Apple, but even more so. The stock has shown such lack of volatility, you could almost call it parabolic (although the angle of ascent is probably not as aggressive as a typical parabolic move).We might expect a healthy pullback to occur on this stock shortly, which might present a good price point for entry.
Netflix hasn’t cracked its moving average, and hasn’t broken its trend. In fact, its pulled back enough to have erased its massively overbought condition of the summer, when it breached $400/share. The stock is looking interesting, but given the seasonal influences, I would still give it a bit of time to see if it gets dragged down a bit further with the others in this group.
Google is probably the healthiest stock in this group. It’s on trend, not overbought, and not parabolic. It may pull back a bit more due to seasonal influences, but it’s a great looking chart.
The Moneyshow: Featuring two rock stars
It appears that two famous rock star names will be at the MoneyShow this year. Keith Richards (the Rock Star of Technical Analysis, as BNN once called him), and Gene Simmons – International Rock Star and founder of KISS. Note that Keith is speaking this Friday Sep. 14 at 4:15pm. Here’s the link.