Investors ‘Buying the Dips’ as Money Rotates Out of the FAANGs

Investors ‘Buying the Dips’ as Money Rotates Out of the FAANGs

$DIA, $SPY, $QQQ, $RUTX, $VXX, $AAPL, $GOOG

The S&P 500 increased 0.1% Tuesday after being down as much as 0.6% following a Key revenue miss from Alphabet (GOOG).

Investors bought the intra-day dip to help the benchmark index set a new closing high and it closed the month with a gainer of 3.9%.

The DJIA (+0.2%) increased its monthly gainer to 2.6%.

The NAS Comp (-0.8%) and the Russell 2000 (-0.5%) lowered their monthly gains to 4.7% and 3.3%, respectively.

Money rotating out of the FAANGs

Some of the hottest trades in stocks suffered a huge market-cap loss Tuesday on earnings concerns.

Led by an earnings-driven sell-off at Alphabet Inc. (GOOG), the FAANG,s a group of major technology and internet stocks lost more than $100-B in combined market capitalization.

The FAANG 5: Facebook Inc. (FB), Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Netflix Inc. (NFLX) and Alphabet, Google’s parent company (GOOG) posted their 2nd-biggest fall this year.

Alphabet dove 7.5% after its revenue missed Street forecasts. That decliner alone represents $69-B chopped from its market cap.

The rest came from Apple’s 1.9% dive resulted in $19-B slashed.

The last time the FAANGs last saw $100-B cut from valuations was after Apple cut its outlook in January, which wiped almost $70-B.

The others

Amazon fell 0.6% paring about $6-B from its market cap, while Facebook’s 0.7% decline resulted in $4-B lost and Netflix finished the session with almost $600-M shaved.

The loss is huge, but it is a signal of how big these names have gotten.

The data tells us that the FAANGs group never lost a combined $100-B in valuation before Y 2018.

After Tuesday’s deep dive, Alphabet’s current valuation is about $828-T. As we have noted, both Apple and Amazon have traded with valuations over $1-T in the past year.

Investors have crowded into the FAANGs in recent years, betting that their dominance in tech would augur some of the fastest rates of growth in the stock market.

Notably: Apple shares have rallied 28% YTD, while an index tracking the other 4 is +32% beating the the S&P 500. And after hours Apple is trading
210.13 +9.46, or + 4.71%.

Tuesday, the major US stock market indexes finished at: DJIA +38.52 at 26592.91, NAS Comp -66.47 at 8095.38, S&P 500 +2.80 at 2945.83

Volume: Trade on the NYSE came in at 1.1-B shares exchanged

  • NAS Comp +22.0% YTD
  • Russell 2000 +18.0% YTD
  • S&P 500 +17.5% YTD
  • DJIA +14.0% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish to Very Bullish in here.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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