Business & Investment

FANG stocks may still be at high risk and rewards, even if they are late this year.

A trader on the floor of the New York Stock Exchange.

Source: New York Stock Exchange

The booming and booming circulating stocks are widely expected to lead the market this year, but they do not fully count Big Tech stocks. May provide shelter in a market storm.

When the major stock indexes hit record highs on Wednesday, the FANG name was right there, leading the market higher. In the past week, telecommunications services have increased by 6% and technology has increased by 4.5%, making it the highest performing sector.

Thursday The market has increased slightly Most FANG names — Facebook, Amazon, And Google Parent Alphabet — Continues to rise. Netflix Thursday fell after a sharp recovery after earnings.

Jack Ablin, CIO of Cresset Wealth Advisors, said retail investors continue to push the name of big growth and brighten them despite the momentum.

“In the short term, investors probably want a high-quality company that makes money,” he said. “Valuations themselves are not timing tools, and expensive stocks can be more expensive. I think there is a risk. Earlier this year, we removed some of the growth risk from the table.”

Big cap growth is expected to lag this year, but if the market recedes, it could be an important source of comfort. Many strategists say the market is lagging behind and may sell out in the coming months. They mainly expect a fairly shallow plunge and say it should be an opportunity to buy a dip.

“Growth always seems to be in the earnings season,” said Lori Calvasina, US equity strategist at RBC. “They keep giving numbers … set aside revenue, I saw the performance [Wednesday] And I saw defensive growth trade working. “

The biggest technical name, Applend Microsoft, followed by Amazon, Alphabet And Facebook It was the biggest contributor to the profits of the market last year. It was these stocks that led to a broader curfew when the market began to rise after the sharp pandemic sold out in March.

Pandemic concerns may have encouraged investors to return funds to growth stocks, despite high valuations, Calvasina said. One of the major risks to the sector and the market as a whole is when a company faces regulatory action. Facebook, Alphabet, Amazon and Apple are all under antitrust scrutiny in the United States or Europe.

Ablin is one of those who are hoping for a market recession, and how much the growth name is hurt depends on what caused the decline.

“If everything is equal and the market falls, it’s probably the FANG stocks that will fall even more. If the market falls in response to some financial disappointment, circulating stocks could fall further. It ’s expensive. ”

For now, the market is under optimism and the economy will be helped by the key stimulus measures proposed by President Joe Biden, the deployment of the Covid vaccine, and a simple Federal Reserve.The· S & P 500 So far this week has risen 2.3%.

Fundstrat’s technical strategist Robert Sluymer is another person hoping to sell out, and he expects it to come soon.

“Our outlook remains unchanged, with stocks bullish until 2021, but we expect tactical suspensions / pullbacks to occur by mid-first quarter, as early as the end of the month.” He wrote. He said the weekly momentum indicator shows the level of overbought towards the middle of the first quarter.

“In the short term, we expect S & P to be pushed towards 3900-4000, at which point short-term trading indicators are likely to peak overbought,” he added. “Looking at the first quarter, we expect pullbacks to be relatively shallow (7-10%), short-lived, and sector- and group rotation predominant.”

Sluymer said it was showing signs of strengthening that the cycle should continue, but that growth stocks were showing improvement.

“After suspending growth from the third quarter to the fourth quarter, EBAY continued to accelerate and NFLX soared hours later. [Tuesday] From support and timely support for AMZN and CRM. “

Calvasina recommends overweight Finance, materials, energy, and she underestimates communications services, consumer staple foods, and REITs. Facebook and Alphabet belong to the communications sector.

She said growth stocks would continue to rise.

“Looking back at the whole year, they will rise, but not as much as the market,” Calvasina said. She expects a shallow pullback, but said it could get worse in the mid-double digits.

“I think it’s a bit choppy,” she said. “None of our overweights … doesn’t work with pullbacks. I think it’s one big deal. You go back and forth between periodic and undervalued stocks and grow. Probably. “

FANG stocks may still be at high risk and rewards, even if they are late this year. FANG stocks may still be at high risk and rewards, even if they are late this year.

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