Is FAANG Weakness Bearish for Stocks?

Simon Maierhofer  |


Facebook  (FB), Apple  (AAPL), Amazon  (AMZN), Netflix  (NFLX), and Google  (GOOGL) – the FAANG stocks – have been leading this bull market higher. As of late, however, FAANG have started under-performing the Nasdaq. Is this bearish for stocks?

The spotlight has been on FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) for much of this bull market, but lately it’s gotten kind of quiet around them. Perhaps that’s because they are actually under-performing the Nasdaq-100.

Is FAANG weakness bearish for stocks?

FAANG vs Nasdaq-100

The chart below plots an equal weighted FAANG index against the Nasdaq-100. The dashed lines highlight non-confirmations.

The black lines mark times where new Nasdaq-100 highs were unconfirmed by FAANG (as currently the case), the blue lines mark times where new FAANG highs were unconfirmed by the Nasdaq-100.

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Since 2014, there have been 7 similar non-confirmations, where FAANG were lagging the Nasdaq-100. The last 4 very followed by micro pullbacks and renewed strength for both. The first 3 saw slightly larger pullbacks before renewed strength.

It was actually more of a warning sign when the Nasdaq-100 failed to confirm new FAANG highs (August and December, 2015 - blue lines).

Based on the short available history, FAANG under-performance is not bearish for stocks in general.

Nasdaq-100

The Nasdaq-100  (QQQ) ETF chart looks more bullish than bearish, as trade is above long-term Fibonacci resistance at 181.80, and on the verge of breaking out of a triangle formation.

Above analysis was initially published in the August 26 Profit Radar Report. Barron's rates iSPYETF as "trader with a good track record" and Investor's Business Daily says: "When Simon says, the market listens." Find out why Barron's and IBD endorse Simon Maierhofer's Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron's rated iSPYETF as a "trader with a good track record" (click here for Barron's profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 164.34 -1.74 -1.05 16,389,185 Trade
GOOGL Alphabet Inc. 1,207.65 -28.48 -2.30 1,721,133 Trade
NFLX Netflix Inc. 361.01 -16.86 -4.46 8,661,346 Trade
AAPL Apple Inc. 191.05 -4.04 -2.07 42,407,666 Trade
AMZN Amazon.com Inc. 1,764.77 -54.49 -3.00 6,362,983 Trade

Comments

Watchlist

Symbol Last Price Change % Change
AAPL

     
AMZN

     
HD

     
JPM

     
IBM

     
BA

     
WMT

     
DIS

     
XOM

     

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