The major indices rebounded sharply in Wednesday's regular session after U.S. futures plummeted in overnight trading, apparently transitioning from uncertainty about a potential Donald Trump victory to fully embracing the reality.
One smaller group of stocks that failed to participate in the rally, however, were the FANG members -- Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Alphabet (GOOGL) , the former Google. The components of the acronym were all off their lows but down on the day, and their underperformance may be a negative for the sustainability of the post-election rally.
Facebook shares gapped lower in the beginning of the month, finding support in the $120 area, the level of the previous May highs and just above the 200-day moving average.
Moving average convergence/divergence and the relative strength index are tracking lower and below their center lines, reflecting early trend and momentum weakness. Chaikin money flow is well into negative territory, an indication that the stock is experiencing selling pressure.
Facebook is currently positioned above fortified support, and gaps tend to be filled, but if the 200-day average is broken, the next level of support is in the $108 area.
Shares of Amazon gapped lower at the end of last month, breaking an intermediate-term uptrend line and the 50-day moving average. The stock has been attempting to hold above what was former support in August and September this year. In Wednesday's session, it gapped lower again and failed to close the gap, ending the session down 2%.
The momentum indicator readings are similar to those of Facebook, and the aroon indicator, which is designed to identify early shifts in trend, has made a bearish red-over-green crossover just prior to the October gap. Overall volume has spiked this month, and money flow readings indicate distribution.
Netflix shares gapped higher last month but soon began rolling over and forming a cluster of high wick or upper shadow candles. These candles reflect an inability to hold their upper price range and suggest underlying weakness.
Moving average convergence/divergence has made a bearish crossover, and the relative strength index has moved out of an overbought condition. Chaikin money flow is still well into positive territory, but the accumulation/distribution line, the base measure of Chaikin money flow, is crossing below its signal average.
Netflix looks vulnerable to a break below the $121 area, which could initiate a pullback that attempts to close the October gap.
Alphabet broke below its 50-day moving average early this month but managed a quick bounce, and this week is retesting the average.
Moving average convergence/divergence has been tracking in bearish divergence to price for the last two months, while the relative strength index moved just above its center line. This month both indicators dropped below their center lines, and the money flow indicators are suggesting that this stock is also experiencing buying pressure.
It remains to be seen if the 50-day average will take on the role of support or resistance, which would play a part in determining the intermediate-term direction of the stock.