We've seen a tremendous rally over the past week or so across most U.S. equities, but the FAANG stocks tend to garner the most attention. These large cap growth names help to carry our major indices either higher or lower, because of their huge market caps. They comprise a large percentage of the S&P 500 and NASDAQ. So what have they been up to? Specifically, did we see a definitive bottom at last Monday's low?
Well, there's no way to tell for certain, however, we can check out their charts for a few clues. Let's look at all 5 plus Microsoft (MSFT) and Tesla (TSLA):
Facebook (FB):
The red-shaded areas on all of these charts represent price action from the beginning of the year until about a week ago. The blue-shaded area highlights the recent market rebound.
FB has a lot of work to do. Yes, the stock bounced over the past week - as did nearly every tech-related stock. Its relative strength appears to be turning lower again and the absolute price chart is still a mess. I see a TON of distribution on this chart in February and the tepid March bounce does little for me. FB is likely to remain a drag on the internet space ($DJUSNS) and the stock market as a whole.
Apple (AAPL):
AAPL is looked upon as THE stock market leader by many, so it's important to gauge the absolute and relative strength here. I see a mixed picture. I love the rebound by AAPL on both an absolute and relative strength. But there does still appear to be a down channel in play and AAPL's relative strength, while solid the past week or so, remains far below its February high.
Amazon.com (AMZN):
I see maybe the most strength here in AMZN. Its relative strength vs. the S&P 500 hit a 2022 high on this rebound, so there certainly appears to be more rotation towards AMZN, which is a positive signal for those who have been invested in and frustrated with AMZN over the past 12-18 months.
Netflix (NFLX):
I'm not impressed with NFLX at all. Yes, of course it bounced. But check out its luke-warm reaction vs. its internet peers. I hope the market is not counting on NFLX right now or it could be in for much more trouble ahead.
Alphabet (GOOGL):
GOOGL's rebound relative to internet may seem really weak - and it was - but check out the TONS of relative strength leading up to last week. I'll give GOOGL a pass as it remains a clear leader not only among internet stocks, but also within the entire stock market as a whole.
Microsoft (MSFT):
You know what they say about owning a really nice home in a bad neighborhood. Well, that's MSFT. It's a great-looking stock in the software group ($DJUSSW). Unfortunately, software has been one of the weakest groups year-to-date. It's down more than 12% - even after the big rebound recently - and is the worst performing industry group within technology (XLK). So despite its relative strength vs. software, it remains a struggling stock vs. the benchmark S&P 500.
Tesla (TSLA):
The rally in TSLA shares has been the most impressive, in my opinion. First, it's gained close to 33% in just over a week, which is obviously well ahead of the S&P 500, so its relative strength has jumped considerably. It's also broken out to a new all-time high vs. its automobile peers ($DJUSAU). There is, however, still a relative downtrend in play since November, which suggests we could see another relative leg lower. Still, the strength here has been undeniable.
There they are. These are 7 of the most influential companies in our key U.S. indices. Only 3 show daily PPOs above zero, which is one technical definition of positive momentum. From a weekly PPO perspective, only AAPL and TSLA currently have positive momentum. Clearly, there's still much more work to be done to declare a market bottom.
Later today, I'll be exploring many of my market signals and what they're telling me as I provide a Q1 Market Update to our EarningsBeats.com community. To join our community and be a part of today's event, which starts at 4:30pm ET, simply register HERE with a free EB Digest newsletter subscription (no credit card required).
Happy trading!
Tom
