Sunday, June 3, 2018

FANG Stocks Continue To Lead The Market Higher

fang stock chart
How pretty is that chart?

The Fang Stock Index continues to make new highs. Now each Facebook, Amazon, Netflix and Google are up year-to-date and all pushed the average higher this week.

Tell me that chart doesn't look like a straight line.

Here's what it means for stocks.

If Tech Leaders Lead The Market Follows

As you know we've been expecting Fang stocks to continue to make new highs (here here here).

If the tech leaders are leading the rest of tech most likely follows as can the rest of the market.

And that's exactly whats going on.

The stock market's been hitting new recent highs breaking out from key levels as we've been expecting (here here here).

Stocks stopped going down on bad news and so they had no problem to go up on good news on Friday. That's why we look at market action. As we wrote (read about "action" here here here), when you get bad news and good action, that's very bullish.

Earnings Driven

Stocks exist because investors want to share in a company's earnings. That's why we're all here caring about the market.

It's earnings that really matter most.

So even with all the back and forth by global leaders about this or that the market has no problem moving higher. Why? Simply, the market is a collection of stocks where earnings are doing better.

Earnings are what matters.

And for the leaders, the components of FANG each have an improving earnings story.

Netflix earnings story is getting nuts.  Amazon's is getting better. Facebook was amazing and Google, even with its size has accelerating revenue growth.

When you have the comfort that earnings are getting better you can start to understand why the market's not going down on bad news any more.

That's very bullish.





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