What Are FANG Stocks?
There is a new acronym floating around Wall Street and investing circles. FANG stocks – Facebook, Amazon, Netflix, or Google. Of course, Google recently changed its name to Alphabet, but FANA doesn’t have the same bite as FANG. But, what are FANG stocks?
And, more importantly, should you invest in them. I’m here to tell you that you should stay away from buying these four stocks individually. You probably already own them and don’t even realize it. FANG stands for (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Alphabet (NASDAQ:GOOG).
They are the tech darlings of the investing world. And, they’ve taken on a fevered pitch with the television pundits recently. Most of that is due to their incredible returns in 2015.
FANG Stocks Slammed After Goldman Warns Of “Valuation Air-Pocket”
The fascination with the influence of a handful of giant tech stocks on the overall markets continued overnight, when one day after Bank of America found that the tech sector is now the “most overweight it has ever been”, surpassing even the record clustering into tech during the dot com bubble…
Goldman issued a report looking at the outsized influence of the five tech stocks in question which it dubs FAAMG – Facebook, Amazon, Apple, Microsoft and Alphabet, which have collectively added a total of $600 bn of market cap this year, “or the equivalent GDP of Hong Kong and South Africa combined.”
Apple, Facebook and other big tech stocks tank, weigh on Wall Street
Big tech was slammed Friday as investors took profits from the group, which some fear has become a massive market bubble. The sell-off accelerated in afternoon trading, with the Nasdaq falling 2.4 percent, and names like Facebook and Apple, down 4 percent.
The S&P tech sector was down 3.3 percent Friday but was still up 18 percent for the year. Goldman Sachs on Friday released a report on the top five outperforming mega-cap names in tech with some warnings on valuations and concerns that their volatility has become extraordinarily low.
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On the Tape Today | 6-12-17
PNC Financial Services setting up a new swing trade long. Solid relative strength on Friday as the general stock market got bashed. The stock price needs to pause for a few days at this level before we enter, because of the recent bullish momentum and resistance. A close over $125 triggers the entry, game planning a profit target of $131. Stop loss on a close below $124.
Tape Reading the SPY ETF
$SPY price action and volume recorded the second distribution day in 10 days. But here is the key, the bullish order flow remains intact.
The biggest mistake you can make is confusing order flow with momentum. Friday’s selling was momentum — just one day of price action. Yes it was significant, but it was only one day. There are always hundreds of reasons after the fact, but if you read the news, those reasons have made headlines for the previous month.
It’s like speaking to a psychic, you ignore everything until they say something relevant. he bull market that began after the presidential election continues to be the bias. You can trade bearish momentum in a bullish order flow.
Here are the two trades:
Short sell stocks with bullish order flow if they are trading below the open price, and especially if they are trading below Friday’s low. This is the low probability trade, and a mistake I used to make. Sure those stocks can have selling/profit-taking, but you are trading against the order flow. If you choose this trade, make it with less shares and exit into momentum.
The only way this trade becomes a solid idea is if your main trend is an hourly chart or lower.
Trade number two is short-selling stocks with bearish order flow. This is the smart trade. Now you are trading current bearish momentum, in sync with bearish order flow.
Stock Market Today:
Stocks to Trade | 6-12-17 Monday Edition
Bullish Momentum: TSO
Bearish Momentum: aaoi, shop, jd, momo, ddd, wdc, nflx, adi, exas, crm, aapl, ctrp, fb, tmus, mar, bidu, akam
Bullish Order Flow: TSO, CCI, AMGN, CAT, AET, BA, DE, UIH, COST, TSLA, WYNN, MCHP, AVGO, TTWO, NVDA
Bearish Order Flow: car, pe, nfx, dvn, clr, trip, dks, mnk, cop, hal, hes, trgp, apc, akam, apa, fl, spg
Double Normal Volume: NVDA, YHOO, AAPL, BABA, MSFT, FB, JD, AMAT, TSLA, ATVI, CRM, JEN, HDS, HLT, AMZN, AVGO, TRGP, KORS, SHOP, ADP
Inside Days: t, pg, wmt, luv, mo, ba
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