It’s time to talk about the “FANG” stocks. I don’t have a position long or short in any of them at the moment so I can be totally objective about them. The odds are that if you do not own one of these stocks than someone else you know does, because these are still the most widely owned individual stocks by the most number of people in the market.
The first FANG stock is Facebook.
FB recently gapped up on earnings and has been dipping back down ever since. It’s been lagging the S&P 500 for months as the declining FB/SPX ratio is showing us at the bottom of the chart.
This means that FB falls more than the stock market when it drops and goes up less than the market when it goes up.
Amazon is the “A” in FANG.
AMZN also has been showing declining relative strength in early September. This is why it has lagged on this rally, not going up as much as the market averages are and there are things even going up more than the S&P 500.
And for good measure let’s add Apple to the “A” in FANG.
AAPL’s price performance is even worse than Amazon’s. It’s only bounced on this market rally and has barely gone up at pace with the stock market averages at all.
AAPL even fell on Friday when the stock market went up!
AAPL is the stock though that people own more than any other stock. It reminds me of what happened with CSCO back in the summer of 2000. It was the
The “N” in FANG is Netflix.
NFLX doesn’t look as bad as AAPL and FB, because it has bounced back up better, but its relative strength plot is going sideways and not up.
And the “G” in FANG of course stands for Google.
GOOG doesn’t look like a disaster even though it is lagging the market averages.
Here is what these stocks have done since August 31, 2018:
All of the stocks are down even with this stock market rally.
Generally speaking it impossible to actually beat the stock market by holding on to laggards like this and you want to be in the best performing stocks and sectors.
There was a time when FANG was the thing to be in – that’s why Cramer called them “FANG” to begin with – but that time was two years ago.
To give you an idea of what a good stock is like last week I talked about TNDM as a stock to watch.
On Friday it went up 4.50% while AAPL had another red day.
I decided to highlight TNDM not because I predict the future when it comes to stocks, but because it had strong relative strength and that meant it was in a good position.
Take a look at the chart.
You can see the relative strength for TNDM has been trending up since November. While the market made a new low and FANG stocks dumped in December TNDM held up.
That put it in a good position to start this year and so last week TNDM broke out and on Friday TNDM soared.
I’m not saying buy it now.
DO NOT CHASE!
I put out an update yesterday to my private Power Investor group with an ETF in a better buying position now poised to breakout and it is up this morning.
The reality is today it is mostly defensive sectors and stocks that are beating the market.
This is something for you to think about if you want to beat the market.
The time in which one could just buy what is popular on CNBC and hold and expect to make money without any strategy or plan except I heard it on TV is over. The FANG stocks are not driving this market rally.
Being in the right sector is key and people do know that they need to be in what is doing well and get out of what have become broken stocks. Warren Buffett is now reducing his stake in AAPL after having pumped it on CNBC a year ago.
And this is why some are now getting into cannabis stocks. And once gold goes through $1350 we’ll see the masses start to chase mining stocks too.
Now yesterday I posted up an interview I did wit David Skarica of www.addictedtoprofits.net in which we talked a bit about gold and the market. To listen to it go here: