FAANGs: a shift to the AAAs?





Considered the symbol of a decade of excessive growth in the stock markets, today the FAANGs seem to be on the way to the end of their heyday. Huge companies, creators of technologies, innovators in their time, loved by all generations, their models are running out and the competition is increasingly aggressive for all of them. Today, easy financing at very low rates, the engine that made their businesses grow and send its market prices to levels of more than $7T of joint overvaluation, is being left behind. 

With their tremendous specific weight on the SP500, the FAANGs alone moved all of the Wall Street indices. What is clear is that today their bubble has burst and is taking them to let's say "correct" valuations, and very interesting levels to rearm portfolios, because some of them will always be great companies to invest in for the long-term. 

Let's review some brief ideas and my next levels for the FAANGs, best viewed on a weekly chart, to read the full outlook.


1. Meta Platforms $META, close $163.74


Along with Netflix, the FAANG that has suffered the most from the bubble burst is $META. Up to date, its plunge is almost 58% from its October 2021 highs. In those days, while its star platform Facebook was "losing its magic" and with it, users (myself included), Zuckerberg make a pretended master move, with the change of brand and business model, the metaverse, of unimaginable potential, he said.

But the fact is that his metaverse model has not caught on yet (and I doubt it will in the short term) among investors. Because, finally, he was not discovering anything new: he was simply settling into a technological subsector that already has several companies, better positioned, involved in it for a long time, from hardware (INTC, QCOM) computing (NVDA, MSFT), blockchain (Ethereum), or contents (RBLX), with more potential and much interesting for long-term investments. So, bye Facebook...

Technically, losing its great (black) 9-year uptrend line in February was critical for META, which thus approaches now its 2-year support at $137, for the mid-term. It can bounce in the short-term, if the environment helps it, and supported by its bullish divergence on the RSI, as it approaches the support of its (purple) bearish downtrend channel. In summary, a very bearish scenario for the mid-term here.


2. Apple $AAPL, close $131.56


Little to add to the fundamentals of this great money-making machine called $AAPL. Just to say that it will be one of the first FAANGs to emerge unscathed from the current stagflation with its high input costs or supply chain shortages, in order to reach a more realistic valuation, and from there resume its usual growth intact. I do not have any doubt.

In the short term, it continues with a bearish structure (-28% YTD) from its (yellow zone) double-top pattern at the beginning of the year, all within its large 20-year bullish structure, supported by the strong (black) uptrend line. 

The 138 key level that was known as support and resistance for 2 years is being tested, and it seems to have lost it, so I think its path could take it to 118, its (red) support since the end of 2020. Upward swings could take it to 138 again, for me, a good place to sell high on its bearish trend.




3. Google $GOOG, close $2157.31


If there's another FAANG that I think will ultimately outperform the current economic environment with ease, it's going to be $GOOG. Its brilliant business model, innovative services and permanent developments will allow it, so its shares are mandatory in any good long-term portfolio. I declare myself a fan of Google, without more.

Technically it is down almost 30% from its highs. Losing its support 2500 in April, it weakened a lot and its price action led it to form a clear bearish structure that could lead it to visit the 2030 level again, soon. From there, the strong (black) uptrend line that comes from the year 2003, that coincides with its 2-year support at $1700 and the (light blue) WMA200, is an enormous key level for the mid-term.


4. Netflix $NFLX, close $175.51


$NFLX has lost its competitive advantage during the pandemic, as many good competitors appeared that copied its, at the time innovative, business model. Its exaggerated valuation (its PE reached almost 300 a few years ago, something unreal) costs it dearly today, in which its price has fallen by almost 75% from its maximum at the end of 2021. 

Its subscriber reduction data was fatal, as thousand of them migrate to similar platforms, just as good and less expensive. In the future, he will continue making big productions or series that will win Oscars, but nothing will be easy now if its managers do not renew the business in some ingenious way. Netflix deserves to be removed from the FAANG acronym, the same as Facebook (or Meta), to be AAA, with Alphabet as Google. It is more real for the next years.

Technically, traders await its arrival at its colossal almost 20-year support in the 150-160 range to take price action there. That's where several annual supports come from. There is no more for Netflix technical analysis: it is in free fall.

Good Trading,
@BravoTrader

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