March 28, 2018 / 3:47 PM / 3 months ago

FANGs: Decay can lead to tooth loss on the charts

-Price-weighted composite of the FANGs: Facebook (FB.O), Amazon.com (AMZN.O), Netflix (NFLX.O) and Alphabet (GOOGL.O) (now ~$2855) down as much as 15.4 pct from its mid-Mar peak

A 3D-printed Facebook logo is seen in front of displayed stock graph in this illustration photo March 20, 2018. Picture taken March 20. REUTERS/Dado Ruvic

-Decline sharp, but composite still within longer-term bullish channel; breaking below support, however, can suggest risk for much more severe decline

-Indeed, FANG weakness intensified as tech sector failed its trust test on the charts

-This as FB has plunged on data breach/FTC probe; struggles to save face above support

-And AMZN tumbles on worries President Trump may target the tech giant

-Action has FANG composite on track for 3rd straight weekly decline (worst run since Aug)

-That said, group yet to violate significant support at early Feb trough ($2666.22 weekly basis). Chart: reut.rs/2pKtcPi

-This level now backed up by 3+ year channel line (~$2605) and rising 40-WMA (now ~$2581); composite has not closed below long-term MA on weekly basis since early-Feb 2016

-Weekly close below support levels can suggest risk for much more severe bear turn (Aug trough $2185.37)

-Of note, analysts’ median PTs on FANGs sum to $3510, or ~23 pct above current value of the 4 stocks

-Meanwhile, FANGs have been an especially favored group within the overall market (composite was up 45 pct in 2017 vs S&P 500 .SPX 19 pct rise)

-However, FANGs/Financial Select Sector SPDR Fund (XLF.P) ratio on weekly basis turning down from all-time high

-Could be another sign of major relative strength shift in favor of value over growth, tech vs banks face-off; key test would be at ratio support line

For a graphic on FANGs click reut.rs/2pKtcPi

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