Can Jim Cramer's FANG Stocks Save the Market This Week?

The stock market is in correction territory and it will be a difficult task to get it out of there. 

But if any stocks can help accomplish this move higher, it is the four momentum stocks TheStreet's Jim Cramer refers to as FANG.

When you look at the late-2005 to early-2016 performance of FANG, Netflix (NFLX) peaked first with an all-time high of $133.27 set on Dec. 7. Then Amazon (AMZN) set its all-time high of $696.44 on Dec. 29.

Facebook (FB) plunged 14.6% as 2016 began to a low of $89.37 on Jan. 20. A positive reaction to earnings on Jan. 27 fueled a pop of 31.6% from the Jan. 20 low to the all-time high of $117.59 on Feb. 2.

Alphabet (GOOGL) , the former Google, had a similar volatility plunge and pop to that of Facebook. The stock plunged 11.6% as 2016 began to a low of $687.78 on Jan. 20. A positive reaction to earnings on Feb. 1, fueled a pop of 17.8% from the Jan. 20 low to the all-time high of $810.35 set on Feb. 2. Talk about a volatile ride, the stock then plunged again, this time by 15.8% to a low of $682.01 on Feb. 8.

Alphabet and Facebook are holdings in Cramer's charitable trust, Action Alerts PLUS. According to Cramer and Jack Mohr, AAP's research director, "The fundamentals for both Alphabet and Facebook, validated by recent results/guidance and driven by powerful and visible long-term growth trajectories, leave us with little doubt that the underperformance since their respective earnings results has been illogical" although shares of FB have recovered in recent weeks.

The FANG group as a whole rose 75% last year versus a 1% total return for the S&P 500. The same investors who piled into these names due to their industry leadership and distinct competitive advantages, making money hand over fist, "have sold out of their positions expeditiously as they actively look to take profits on the still-massive gains they had generated on the respective stocks," said Cramer and Mohr.

"We have refused to trade around these names as we view both Alphabet and Facebook as long-term core holdings, not event- or technical-driven trading vehicles," they concluded.

Exclusive Look Inside:

You see Jim Cramer on TV. Now, see where he invests his money and why FB and GOOGL are core holdings of his multi-million dollar portfolio. Want to be alerted before Jim Cramer buys or sells FB or GOOGL? Learn more now.

Here's today's FANG scorecard.

 
During times of extreme downside volatility such as January and February, it's harder to make investment and trading decisions. This makes the daily and weekly charts, and key levels extremely important for those wanting to capture the volatility rather than fear it. It takes a special discipline to buy on weakness and to sell on strength, when the overall market has been in a sell strength mode since the end of June.

The weekly charts shown below are mixed. The red line through the weekly price bars is the key weekly moving average (a 5-week modified moving average). The green line is the 200-week simple moving average considered the "reversion to the mean". The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold. A negative weekly chart shows the stock below its key weekly moving average with weekly momentum declining below 80.00 in a trend towards 20.00.

Here's the weekly chart for Amazon.com.


Courtesy of MetaStock Xenith

Amazon.com closed Friday at $555.23, down 17.9% year to date and in bear market territory 20.3% below its all-time high of $696.44 set on Dec. 29. The stock is 17.1% above its Feb. 9 low of $474.00 set on Feb. 9.

The weekly chart is neutral with the stock below its key weekly moving average of $564.62 and with its weekly momentum reading of 24.66 up slightly from 23.87 on Feb. 19.

Investors looking to buy Amazon should enter a good till canceled limit order to buy the stock if it declines to $540.85, which is a key level on technical charts for all of 2016. Investors looking to reduce holdings should enter a GTC limit order to sell this stock if it rises to $621.72, which is a key level on technical charts until the end of June.

Here's the weekly chart for Facebook.


Courtesy of MetaStock Xenith

Facebook closed Friday at $107.92, up 3.1% year to date and set an all-time high at $117.59 on Feb. 2. The stock is 20.8% above its Jan. 20 low of $89.37.

The weekly chart is positive with the stock above its key weekly moving average of $104.09 with its weekly momentum reading projected to rise to 54.16 this week up from 53.84 on Feb. 19.

Investors looking to buy Facebook should enter a good till canceled limit order to buy the stock if it declines to $99.94, which is a key level on technical charts for this week only. Investors looking to reduce holdings should enter a GTC limit order to sell the stock if it rises to $112.42, which is a key level on technical charts until the end of March.

Here's the weekly chart for Alphabet.


Courtesy of MetaStock Xenith

Alphabet closed Friday at $724.86, down 6.8% year to date and in correction territory 10.5% below its all-time high of $810.35 set on Feb. 2, 2016. The stock is 6.3% above its Feb. 8 low of $682.01.

The weekly chart is negative with the stock below its key weekly moving average of $728.95 with its weekly momentum reading at 33.63 down from 36.45 on Feb. 19.

Investors looking to buy Alphabet should enter a good till canceled limit order to buy the stock if it declines to $672.58, which is a key level on technical charts until the end of March. Investors looking to reduce holdings should enter a GTC limit order to sell the stock if its rises to $756.13, which is a key level on technical charts until the end of June.

Here's the weekly chart for Netflix.


Courtesy of MetaStock Xenith

Netflix closed Friday at $94.79, down 17.1% year to date and in bear market territory 28.9% below its all-time high of $133.27 set on Dec. 7. The stock is 18.6% above its Feb. 8 low of $79.95.

The weekly chart is negative but oversold with the stock below its key weekly moving average of $96.72 with its weekly momentum reading at 16.63 versus 15.08 on Feb, 19 with both levels are below the oversold threshold of 20.00.

Investors looking to buy Netflix should enter a good till canceled limit order to buy the stock if it declines to $82.98, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should enter a GTC limit order to sell this stock if it rises to $105.60 and $110.13, which are key levels on technical charts until the end of March and the end of June, respectively. 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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