FANG+ index soars, as big names keep rallying
Major technology stocks have been huge winners since the March low, but there is currently no sign of much impending weakness in the index and its major constituents.
FANG+ index up 61% in 56 trading sessions
From the low at 2460 in late March, the FANG+ price has gained 61% in 56 trading sessions, after falling 37% in 21 trading days. The resilience of big-name tech stocks has been a key feature of the market rebound, as investors piled in to the sector as risk appetite recovered.
In one sense, this is perfectly sensible. The drop to the March lows wiped out the entire rally of the fourth quarter (Q4) of 2019, but represented the chance for investors to buy into good companies at more attractive prices than at any time in the previous five months.
Such second chances are rare in markets, and since the March low the price has not looked back. While we may see pullbacks along the way, the bounce from the lows is intact.
How have FANG stocks returned since sell-off?
Below we look at some of the major components of the index:
The Facebook price has finally cleared the zone around $220 that has marked the highs over the past two years. Steep rising trendline support from the March lows has remained in place over the past two months; a near-term pullback may see this trendline breached, but if support develops around $210 the overall bullish outlook remains in place.
Amazon was one of the big winners from the imposition of lockdowns, driving its stock higher from the March lows and through the February highs. While it has seen some weakness, the overall move higher continues, and with the price close to recent highs it looks like momentum continues to lie with the bulls.
Netflix too was a big winner of lockdown, as consumers returned to the streaming service in substantial numbers. Over the past six weeks, dips below $40.00 have been buying opportunities, or at least have stemmed any further downside, and the recent drop towards the rising 50-day simple moving average (SMA) has seen further support.
For Google (Alphabet), the steep uptrend from the March lows has eased, but as with the other stocks in the index there is as yet little sign of a real pullback. Indeed, the current drift higher/modest consolidation looks likely to resolve into another rally that takes us on towards the previous highs, while a drop back towards the 100-day SMA ($133) might provide another buying opportunity.
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