Subscribe to The Free Market Chronicle and join the 2,711 subscribers getting it for FREE!

[widget id=”wordads_sidebar_widget-41″]

Netflix, Biotech, Alphabet, Facebook, and Microsoft- Now What?

What’s the saying, easy come, easy go? Despite all the mayhem, the S&P 500 is still up by nearly 3.5 percent so far in 2017. Amazon is up almost 23 percent, Netflix is up about 40 percent, Alphabet is up about 6 percent, and Facebook is up about 8 percent.

[widget id=”text-16″]

^SPX data by YCharts

Too Far, Too Fast

Those are some pretty healthy gains, for only a few weeks of the year. Meanwhile, earnings for all the company’s mentioned were solid; the stocks are just guilty of rising too far too fast, while investor expectations got well ahead of themselves.

It was Monday, January 29, that I noted that Alphabet, Amazon, and Microsoft were all at well-overbought levels, while Apple was struggling. Well, the stocks came back to earth by the end of this week, and that is good.

[widget id=”text-19″]

Valuations

Believe it or not, Alphabet only trades at 23 times 2019 forward earnings estimate of $49.09. Meanwhile, Facebook trades at just 22 times 2019 estimates of $8.93, while Microsoft sits at 23.50 times estimates of $3.93. These are not expensive for the type of growth they offer investors, and likely means that unless we get a total collapse in their earnings power, it isn’t likely they fall too far.

[widget id=”text-12″]

Netflix

The one stock that was most impressive all week was Netflix, which was only down 2.5 percent, better than the S&P 500 nearly 4 percent decline, especially given the stocks massive start to the year.

Most amazing is that Netflix finished Friday higher by nearly 90 bps, despite the S&P 500 falling over 2 percent. Like I mentioned earlier in the week, it almost feels like the buyers are using any weakness in the market to soak all the liquidity that comes their way.

We need to continue to watch how Netflix trades over the coming days. Because once the market stabilizes, Netflix may be on its way much higher.

[amazon_link asins=’B0027VSU9S’ template=’ProductCarousel’ store=’us-blob’ marketplace=’US’ link_id=’b7510781-088a-11e8-a819-c1b392dd7c5f’]

Biotech Stocks

The biotech stock also held up reasonably well in the madness of Friday’s trading, with the IBB falling by only 1.6 percent. Despite the ETF falling below support at $113, which proved not to be nearly as strong as I had thought, its uptrend is still in place. We will not want to see the IBB break $111, or we are looking at a fall back towards $106.

Night!

[widget id=”text-13″]

[amazon_link asins=’B001RTSGRM,B0027VSU9S’ template=’ProductGrid’ store=’us-blob’ marketplace=’US’ link_id=’ddac9aaa-07bd-11e8-b496-4d0ce69fcd2f’]

Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets

Just $200 Per Year – Get Your Free Trial

Recent Videos:

How The “Street” Got Apple So Wrong

Qorvo Sheds Some Light On Apple

Did Broadcom Seal Apple’s Fate?

The Sky Is Falling. Relax It’s Not.

Getting Ready For S&P 500’s Pullback, Plus Subscriber Mailbag

Dollar Breaking Down, Biotech And Intel Breakout

Why Apple May Not Be Toast Afterall

Why It May Be Time To Get Bullish On Materials As Dollar Plunges

Free Articles Written By Mike:

Bitcoin Investors Face More Pain On Likely 35% Plunge

Why Apple’s Supercycle Has Only Begun

Qualcomm’s Time To Decide Its Fate Has Come

Why Visa’s Stock Is Running on Fumes

How Tesla Mauled The Bears

Chipmaker Broadcom Doesn’t Need Apple To Rebound

Apple May Lose Crown As World’s Most Valuable Company

Chipmaker Skyworks Seen Rising Despite Apple Skepticism

Why Boeing’s Stock Will Keep Flying High

Why Microsoft Is Ready For A 10% Fall

Join our 2,711 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe

-OR-

[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]

Photo Credit Via Flickr

Michael Kramer of Mott Capital own shares of GOOGL an NFLX

Mott Capital Management, LLC is a registered investment adviser. 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.

Tags: #netflix #biotech #stocks #microsoft #amazon #alphabet #microsoft