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Alphabet Was the Best FAANG Stock in the First Half - Will It Be in the Second Half?

Alphabet was the best-performing FAANG stock in the first half of 2021. How do the charts look heading into the second half of the year?

Drumroll please: The best-performing FAANG component in the first half of 2021 was Alphabet  (GOOGL) - Get Report, with a 39.3% gain.

That easily beats the next-best performer, Facebook  (FB) - Get Report, which gained 27.3% in the first half and eclipsed a $1 trillion market cap

If you include Microsoft  (MSFT) - Get Report - which isn’t in the group but perhaps should be based on its market cap - it’s the only other double-digit performer in the same period, up almost 22%.

As readers know, Apple  (AAPL) - Get Report and Amazon  (AMZN) - Get Report are basically flat so far this year as both stocks continue to consolidate. The hope is that they will break higher at some point and help keep the market churning higher.

Netflix  (NFLX) - Get Report is the only FAANG component that finished lower in the first half of 2021, down 2.3%.

So that begs the question: Can the winners keep on winning? Specifically, can Alphabet repeat as a six-month performance champ? Let’s look at the chart.

Alphabet, Apple, Amazon, Facebook and Microsoft are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL, AAPL, AMZN, FB or MSFT? Learn more now.

Trading Alphabet

Daily chart of Alphabet stock.

Daily chart of Alphabet stock.

TheStreet Recommends

In trading, there are a few rules. But the two most basic ones are don’t fight the Fed and the trend is your friend.

As the Federal Reserve remains incredibly dovish, the overall trend of the equity markets remains higher. In the specific case of Alphabet stock, the trend is also higher. There’s no point in shorting it or fighting it until that trend breaks.

Notice the stock’s tendency to consolidate for several weeks or months at a time, then push to new highs. That usually corresponds with a test of the 50-day moving average.

So until that measure fails as support - or put another way, until that “trend bends” - we must respect the overall direction. Plus, Alphabet is a great company, so there’s even less reason to bet on its demise.

In that sense, buyers will likely step in to defend the 50-day moving average should we get a decent pullback in the stock. Keep this measure in mind.

From here, I’m interested in seeing if Alphabet stock can climb to $2,500. If so, the $2,533 level becomes of interest, as does the $2,590 area.

While a repeat gain of 40% in the second half is unlikely to happen, it’s possible Alphabet could continue to run ahead of the pack. It’s also possible that we see some money rotate out of the stock and into the laggards, like Apple and Amazon.

Just keep the trends in mind, but just because the calendar flipped doesn't mean Alphabet stock will.