NYSE FANG+ Index - As Good as it Gets?
NYSE FANG+ Index (NYFANG – 7,255.21) is an equal dollar weighted index. It represents a segment of the technology and consumer discretionary sectors. The index provides exposure to ten of the largest tech giants. The five core FAANG stocks are online social networking leader Facebook, tech giant Apple, e-commerce behemoth Amazon, on-demand streaming service provider Netflix, and the internet search and cloud computing leader Alphabet’s Google. On top of the above names are another five actively-traded technology growth names, including Alibaba, Baidu, Nvidia, Tesla, and Twitter. An ETN is also available for investors and traders – MicroSectors FANG+ ETN (FNGS – 31.70).
NYFANG is highly correlated to the Technology sector and the high-growth industry and has outperformed the market (SPX) since its inception in September 2017. During the Covid-19 pandemic, it grew in stature and popularity as the stay-and-work from home theme emphasized the importance of technology. However, since February 2021, NYFANG has slowed and given up some of its leadership roles, at least from a near-to-medium term relative strength perspective.
So, the question then becomes, is this as good as it gets?
Although some of the NYFANG stocks have climbed to new all-time highs, others are trading near their yearly lows. In short, the diverging performances warn of wide discrepancies between the haves and the have nots.
The haves are FB, AAPL, GOOGL, NVDA, and TWTR and the have nots are AMZN, NFLX, BABA, BIDU, and TSLA.
GOOGL (2,725.03) has been the most consistent of the NYFANG stocks recording numerous new all-time highs this year, including the most recent rally to 2,765.94 (7/28/21). The two recent gap-ups (7/23/21 at 2,570-2,596) and 7/28/21 at 2,688-2,706) and expanding volume reaffirms its leadership role.
FB (362.967) has one of the better charts. The breakout above its 9-month technical base during early April 2021 confirms its leadership role. The most recent consolidation and successful test of its 50-day ma (344.73 – support) signal the next FB rally to retest its all-time high (377.55 - 7/28/21).
NVDA (206.37) is one of the strongest semiconductor names. Semiconductor Index (SOX) has just broken out of its 7-month base above 3,314-3,358, suggesting the impending emergence of technology sector leadership. NVDA is nearing another new all-time high above 208.75 (7/7/21).
AAPL (147.06) has also broken out to new all-time highs (150.00 – 7/15/21). The pullback over the past two weeks is a high-level consolidation, alleviating a near-term overbought condition. Above 150.00 confirms another record high and suggests 8.33 points for the next AAPL rally to 156-158.33 (top of the Sep 2020 uptrend channel and breakout target).
TWTR (69.28) is nearing an inflection, evidenced by the triangle pattern or head/shoulders bottom in the past six months. A contraction in the Bollinger Bands also hints at an impending explosive price move. Above 73.22-73.24 (Apr/Jul 2021 highs) confirms a breakout. Below 64.65-65 and 58.83-59.28 confirm a breakdown.