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FANG Stocks May Be In Big Trouble – The Daily Recap
MICHAEL KRAMER AND THE CLIENTS OF MOTT CAPITAL OWN SHARES OF NFLX, MO, VZ, GOOGL
It has been the quarter of surprises. First, it was Netflix; then it was Facebook, now it was Nvidia. Nvidia! The company that hasn’t guided down a quarter in almost three years! OMG. I’m sure there will be a lot of commentary around Nvidia, and it may even be down big tomorrow. But let’s face facts here folks. The company grew earnings per share by 92 percent y/y, on revenue growth of 40 percent.
For the fiscal third quarter, it guided to revenue of $3.25 billion, versus analysts estimates of $3.33 billion. Meanwhile, non-GAAP gross margins guidance goes to 62.8 percent, that is down from 63.3 percent this quarter.
It doesn’t feel like a complete disaster to me. But it also comes down to expectations and the market, quite frankly, isn’t used to this from Nvidia and has been spoiled. The stock is not cheap and is priced to grow, with a one-year forward PE ratio of nearly 29, that is roughly double the average of most chip companies.
We’ll have to see where the stock opens tomorrow, but support now is around $235, and then $217.
Anyway, moving on stocks moved higher today, with the S&P 500 rising by nearly 80 bps, but I will not be happy until it clears 2,853, and for now, that hasn’t happened yet. In fact, the index failed right at resistance, so we need to a clean break out tomorrow. I’m not sure that happens on a Friday in the middle of August.
FANG Stocks In Trouble
Thes FANG stocks (minus the G) aren’t looking so good these days., and are looking somewhat troubled. I talked about it in my subscriber video today, breaking down what I’m watching and how I catch these little trends. Trouble Ahead For FANG Stocks?
Facebook has had a terrible few days, and that continued today with the stock down by nearly 3 percent. I think there is more downside here, probably a retest of $166 is now in the works.
Amazon also failed at resistance, and that rising wedge is beginning to look problematic. I did a video and talked about Amazon yesterday. Amazon May Plunge 10%
Netflix is holding by a thread at support around $323.
Where is the money flowing? I’m growing more convinced it moving into the staples. Look at the chart of P&G; you’d think this was the newest high flying technology company.
Meanwhile, Altria is also starting to move higher. $64 to $65 seems within sight.
Look at Pfizer.
So you do not have to be a genius to realize all these companies have a few things in common. They are all low beta and high yielding. You think there is rotation happening? I do not believe this necessarily a bad thing; it may even be healthy for the markets longer term.
Have you seen Verizon lately? The stock is at nearly a multi-high! Two things are going on here in my opinion. The first are the reasons mentioned above, and second, 5G is coming. I think 5G changes a lot of things and opens technology to a whole new level. I like Verizon over the other carriers for this reason.
That it for today!
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