Facebook crashed yesterday for an over 20% drop. It turns out the “Metaverse” is costing the company billions a year to try to develop and isn’t expected to really work for another ten years. So, right now it’s a concept and with Facebook.com users and usage having actually peaked out and slightly dropping people betting on this as a growth stock are in effect betting that this “Metaverse” concept will truly revolutionize the world.
But what if it doesn’t?
What if no one really wants to wear the goggles to live their lives (I certainly do not) or what if someone else makes it better?
Right now it is a rebranding PR stunt and nothing more real than “NFT” art or “virtual real estate.”
All it represents now is additional expenses for the company and so the stock crashed.
But today, it might be useful to step back and look at the charts of all of four the “FANG” stocks, because they served as the market leaders – or generals – of this past bull market since 2009.
Out of the four “FANG” stocks only one is above its 200-day moving averages – GOOG.
Two of them – FB and NFLX – crashed.
And the third – AMZN – closed substantially below its 200-day moving average, although it is gapping up into it this morning on earnings.
In other words, three out four of the famous “FANG” stocks are now in full blown stage four bear markets., because their moving averages are now resistance on them.
When three out of four of the three key bull market leaders stocks are in bear markets that tells you all you need to know about the underlying trend of the stock market now.
It’s bearish!
Now in bear markets you can get rallies and we just got one after the big January drop and I hope the market can hang in there some more this month, but the overall cycle trend is bearish.
That’s not something to be scared of, but to just adapt to.
One thing to do is to stick with the sectors and stocks that are outperforming the market averages, shift out of past leaders now lagging and into stronger things.
I talked the other night in a video about Facebook in case you missed it:
BTW – when I put this video on Facebook they made it so just about NO ONE could see it.
-Mike
