Stock Market Analysis 4-5-18...Follow The Leader....The FANG Stocks
Follow the leader is a children's game. First a leader or "head of the line" is chosen, then the children all line up behind the leader. The leader then moves around and all the children have to mimic the leader's actions. Any players who fail to follow or do what the leader does are out of the game. When only one person other than the leader remains, that player becomes the leader, and the game begins again with all players joining the line once again.
The FANG stocks represents the most popular and best performing tech stocks in the Markets. The four stocks — Facebook, Amazon, Netflix, and Alphabet — all trade on the NASDAQ, which measures the performance of more than 3,000 tech and growth stocks.
The S&P 500, which is based on the market capitalization of the 500 largest stocks listed on the NYSE and NASDAQ including FANG stocks, is considered the best representation of the U.S. market. Within the S&P 500 index, FB, AMZN, NFLX, and GOOG, are ranked 6th, 3rd, 40th, and 9th, respectively.
The FANG stocks, along with just a few others, accounted for most of the S&P 500's total return in 2015. Netflix jumped 134%, Amazon climbed 118%, Google rose 46% and Facebook rose 34%. Remove the top 10 performers from the S&P 500 in 2015 and the index's total return would've been negative vs. the S&P 500’s return of 1.4% in 2015.
As you can see from the chart below, the performance of the FANG stocks were in alignment with the S&P 500 in 2016.
However, in 2017, the FANG stocks outperformed the S&P 500 handsomely. While the S&P 500 Index gained 19%, Facebook rose 53%, Amazon jumped 56%, Netflix added 55% and Google rose a 33%.
I have been talking about the Markets topping for many weeks now. So if the Market is going to go down, "follow the leader" for signs of a Markets breaking down.
Facebook - $145 is monthly demand and a key level.
Amazon - The Feb low at $1270 is a key level.
Netflix - the strongest in the Group, key level is at $220.
Google - the weakest in the Group, key level is at $920.
If prices break these key levels, we should see further declines and possibly confirmation of the start of the Markets going down.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
I agree with a lot you had to say.