(Note: The author of this fundamental analysis is a financial writer and portfolio manager. He and his clients own shares of GOOGL and NFLX.)
FAANG stocks (the acronym for Facebook, Apple, Amazon, Netflix, and Alphabet’s Google) are the cusp of a significant comeback after some investors left them for dead. It seems the FAANG's didn't get the message that it was time for them to roll over.
Since September 25, Netflix Inc. (NFLX) shares have surged by almost 10 percent, while Alphabet Inc. (GOOGL) shares have risen by 5 percent. Shares of Apple Inc. (AAPL), Amazon.com Inc. (AMZN), and Facebook Inc. (FB) have increased between 3 to 4 percent as well. By comparison, the S&P 500 has only increased 2 percent during the same time.
The FAANG stocks had entered into a period of consolidation after a year of substantial gains, and it appears they have all started to roar back to life with the fourth quarter underway. One can make a compelling argument that they will continue to rise.
Amazon to Challenge All-Time Highs
Amazon shares broke out last week from a two-month downtrend. The rise has come on average levels of trading volume. However, one would want to see that buying and volume start to rise to confirm the stock's move higher. Should the move higher gain momentum, the stock should be able to challenge the highs set around $1,080 over the summer.
Alphabet's Run At $1,000
Alphabet shares have also broken out of their recent downtrend, as we noted in a recent Investopedia article. (See more: Traders Betting Alphabet Could Rise 10 Percent.)
Alphabet seems primed to make a run to $1,000 for the third time, and this time maybe it will get through. Trading volume has been average, and one would like to see a breakout confirmed with increasing volume as the stock price continues to rise.
Netflix Run At $200
Netflix shares broke out without any doubt on October 5, on surging volume, after the company announced it plans to raise prices on two out of three tiers of its services. The stock is once again in all-time high territory. The $195 level should act as a substantial area of technical support should the stock retract some its gains. (See more: Netflix Traders Gearing Up For Big Volatility.)
Apple Found Support
Apple hasn't broken out yet, but the stock has put in a solid bottom around $150, and it came on extreme levels of volume.
Waiting on Facebook
Facebook shares, like Apple, appeared to put in a bottom on very heavy levels of volume. But the stock needs to make a clean break above the $172 level to confirm a breakout. For now, Facebook still looks to be in a period of consolidation.
Technology seems far from dead at this point, and the leaders are going to be the reliable names of the past. The FAANG stocks will probably continue to lead the markets to new record highs.
Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.