We're in for a short-term rally. As in a rally that will last, at most, two or three weeks (in my opinion). For many charts, a few weeks of upside will be enough time to shape out a right shoulder to complete their head-and-shoulders patterns. I'm urging you to take profits in the coming weeks if you've got 'em because they won't be there for long.
In a month we'll forget that this rally ever existed because we'll have fallen so low. As much as bulls want to maintain their long term outlook, it just won't work with 2016's volatility. Oh, and let's not forget that most of the charts I'm seeing are a mess. Almost every single one of them. For example... Goldman Sachs (GS)? Awful. Apple (AAPL)? Terrible. 3M (MMM)? Don't get me started. Visa (V)? Vomit. Nike (NKE)? Just don't do it. My advice? Do yourself a favor and short Apple and 3M into earnings this Tuesday. I don't see a reason to be long either going into the quarter. If you have a reason, please let me know; but right now I see nothing. I'm calling for a retest of 1950 on the S&P 500 followed by a rollover to 1770. Just be patient -- I'll see you there.
0 Comments
FANG, the acronym for Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOGL) (formerly known as Google) was the staple for comparison throughout 2015. These stocks were by far the best performers over the last year, with Netflix and Amazon the winningest of them all. If you put your money in any of these four stocks, you tremendously outperformed the overall markets. And, if you put your money in either of the middle two letters, you doubled your money -- and then some.
These gains are impressive and, on their own, are not a reason to sell. Just because a stock doubled in price over a 12 month period does not mean that it won't move higher in the next 12 months. In a turbulent market, the names that compose FANG are actually good places to be. The appeal of these companies is their growth, which can often maintain its trajectory in a lackluster economy.
However, it's possible that these names are becoming overheated. I'm seeing some action in three of the four FANG names that should get you a little concerned going forward. While I believe in each one of these companies in the long haul, I think the next fiscal year won't be so pretty. If you've enjoyed the ride higher, you may want to realize some of these gains and wait for better prices to reenter. I do think that these prices will come but, given the beta of these names and the overall market volatility of late, I would not be short any letter of FANG.
|