FAANG: Update on the "Story of the Year"
Learn how Big Tech is viewed when optimism shifts to pessimism
by Bob Stokes
Updated: June 06, 2019
The FAANG stocks of Facebook, Apple, Amazon, Netflix and Google (Alphabet) have seen better days.
Big Tech is under increasing attack from the government -- and stock prices have continued to dive.
Our Elliott Wave Financial Forecast analysts expected as much. Indeed, our December 2018 issue featured a section titled "The Story of the Year," in which it mentioned a report that said a new era of aggressive anti-trust action against "Big Tech" is "just beginning."
That was by no means a common point of view.
Around that time, a prominent financial website had this headline (CNBC, Oct. 11)
Massive Pullback in Tech Stocks Is a Buying Opportunity: "We Love Seeing the Panic"
Well, since our December Elliott Wave Financial Forecast analysis, anti-trust attacks have increased on "Big Tech" and the "buy the dip" approach has not worked out so well.
Let's briefly look at the anti-trust developments first. This June 4 CBS News article excerpt sums it up:
The U.S. government is putting America's biggest technology companies in its crosshairs, with the Department of Justice and Federal Trade Commission preparing to investigate Google, Facebook, Amazon and Apple over potential antitrust concerns.
Turning to stock market action, the NYSE FANG+ Index has declined more than 8% (as of June 3) since our December Elliott Wave Financial Forecast published.
This chart from our June 3 U.S. Short TermUpdate provides an even broader perspective, with the commentary below the chart:
It has been nearly an entire year since the NYSE FANG+ Index topped... When social mood transitions from one of dominant optimism to one of growing pessimism, "tech" is seen through a prism where it is viewed as an "avenue of exclusion, obfuscation and assault," as discussed in December. This transition is well underway.
Of course, no market goes straight up or down without countertrend moves.
So, at this juncture, it's important to keep an eye on the Elliott wave price patterns of the individual names within the technology sector, as well as the broad market.
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