The stocks that lead the market higher are often the stocks that are hit the hardest when the market declines, and that was the case again in Wednesday's session. Facebook (FB) shares were down 3.9%, Amazon (AMZN) dropped 5.8%, Netflix (NFLX) plummeted 8.5%, and Alphabet (GOOGL) fell 3.4%, against a 2.5% pullback in the S&P 500 (SPY) index.
The FANG stocks, as TheStreet's Jim Cramer named them a few years ago, were given a root canal on Wednesday, but the fundamental standing of these stocks has not been erased by two weeks of market volatility. Now is the time to look for levels of technical support and trading opportunity.
After all, it is also true the stocks that are hit the hardest in a decline are often the ones that benefit most from a bounce.
Read on for detailed analysis of each stock's chart.
The chart for Facebook, which is a holding in Cramer's Action Alerts PLUS charitable portfolio, shows the stock contracting near its highs in a symmetrical triangle pattern at the end of last year and then breaking down through the support line at the beginning of this year. It's moved back to retest the August and September highs, and the stochastic oscillator has entered an oversold condition.
The next level of support is the eight-month uptrend line, which has been following the rising 200-day moving average. This nearby level needs to hold and give time for the price momentum indicator to readjust and for money flow to improve.
From a fundamental perspective, Jim Cramer recently wrote: "Facebook is clearly ahead of the game in communication and remains the lead innovator in today's market."
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Amazon broke below its 50-day moving average at the beginning of the year, and the stock is now attempting to fill a price gap created last October. The lower end of the gap is intersecting with an eight-month uptrend line and the rising 150-day moving average. This is the next significant level of support.
The relative strength index is entering its oversold zone, and the volume-weighted money flow index is near its lower range.
Netflix was the hardest-hit of the group, and ironically the technical indicators were turning around for the stock.
Stochastics was moving higher and taking out its centerline, and the money flow index was above its 21-period signal average and centerline. The 50-day moving average proved formidable resistance, however, and the stock price fell back to the uptrend line drawn off the September and October lows.
The small zone between the uptrend line and the 200-day moving average is now the next area of support.
Alphabet pulled back off its December high to the top end of an October gap and its 100-day moving average. The stochastic oscillator is in an oversold condition, and the money flow index is in decline. The bottom of the gap is intersecting with a six-month uptrend line and is the next logical level of support.
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