These 5 Stocks Are Crushing It

They provide some of the most widely used products and services in the world…

They have an oversized influence on the stock market…

And whether you’re an active trader or a passive investor, you likely own at least one of them.

We’re talking about the “FAAAM” stocks.

Wait – don’t you mean the “FAANG” stocks?

Well, yes and no…

The “FAANG” stocks are Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google (GOOG, GOOGL).

That acronym is years old. The actual name for Google’s parent company is now Alphabet (hence the extra “A” in our new, modified acronym).

And Netflix – the $167 billion video-streaming company – is no longer the dominant force that it once was. Competition has picked up. It hasn’t had a single quarter with positive free cash flow since 2014. And its market movements aren’t watched as widely anymore.

Software giant Microsoft (MSFT), on the other hand, has risen back to glory. And with a $1.4 trillion market value, it’s now the largest publicly traded company in the U.S.

So today, we’re checking in on the FAAAM stocks… for one key reason.

These businesses dominate their industries. Four of the five have a market value of more than $1 trillion. And when their stocks move, the markets move.

As long as these five stocks are performing well, the broad stock market indexes will likely be strong, too. And as we’ll show you today, the FAAAM stocks are crushing it…

Understanding trends can dramatically improve your results in the markets. When an asset establishes a trend – either rising or falling – it tends to keep moving in that same direction.

For the FAAAM stocks, we’ll look at the long-term trends – the 200-day moving averages (200-DMAs)…

The 200-DMA is simply the average of an asset’s closing prices for the prior 200 trading days (about 10 months). You need to know two main things when looking at this…

  • The first is that during bull markets, assets tend to spend most of their time above the 200-DMA. During bear markets, they spend most of their time below it.
  • The second thing is even more important… The 200-DMA itself is the long-term trend. And it acts like a magnet. Whether it’s moving higher or lower, assets tend to have a hard time going in the opposite direction for long.

We use an asset’s 200-DMA to help form our outlook for the next several months to several years. With that in mind, let’s start by looking at social media firm Facebook…

In the chart below, you can see that Facebook bottomed in December 2018 just above $124 per share. At their lows, shares were trading about 27% below their 200-DMA. The stock was overstretched to the downside…

Over the next month, the rubber band “snapped back.” And since last March, shares have mostly held above their 200-DMA. Take a look…

Facebook had only a minor dip in its uptrend. And the stock trades above its rising 200-DMA. That’s a positive sign, both for the stock and for the market.

Next up is the $1.4 trillion consumer-electronics giant Apple…

Apple has been on a tear lately. Shares trade well above their rising 200-DMA. But this isn’t cause for concern… In short, when Apple is very extended above its 200-DMA, you want to buy.

We ran a historical study on this in December. To give you just a few highlights… six, nine, and 12 months after major extended levels, returns were positive 88%, 100%, and 96% of the time, respectively. And the median returns were 27%, 37%, and 63%.

As you can see below, shares jumped above their 200-DMA in June. Since then, they have soared. Apple is up 16% since our study… and up 130% from its January 2019 low…

Apple’s long-term uptrend is strong. And as the second-largest company in the U.S. market, this is a big check mark for the bulls.

Next, let’s look at $1.1 trillion online-retail and web-services behemoth Amazon…

As you can see below, Amazon traded close to its 200-DMA for most of the past 16 months before spiking higher. Now, Amazon trades at an all-time high. And on Wednesday, shares closed about 17% above their 200-DMA…

Amazon looks great. Many trend-following traders have likely jumped back into its shares with the recent rally. Amazon is also one of the largest companies in the U.S. So this is another check mark for the bulls.

Now, let’s look at $1 trillion web-based consumer-services dominator Alphabet…

In the chart below, you can see that Alphabet most recently crossed above its 200-DMA in July. Since then, it has been in a steady uptrend. And on Wednesday, it closed at a new all-time high…

Alphabet’s market value and influence on the indexes is right up there with Amazon’s. So again, this is a big, bullish sign for the market.

Finally, we have the $1.4 trillion software giant Microsoft (MSFT)…

In the chart below, you can see that Microsoft is “leading the pack.” Shares are up 74% over the past year. And they’re up 107% over the past two years. Right now, Microsoft trades 29% above its rising 200-DMA…

Microsoft is one of the strongest stocks in the market. Its shares are up about 10% in the past two weeks alone. This is another huge positive signal for the market.

Giant gains in the market’s largest, most watched, and most influential stocks tell us this bull market is still going strong.

We can’t say that a sharp pullback is out of the question. It isn’t. In fact, we fully expect to see a pullback of at least 8% to 10% within the next few months.

As our friend and colleague Steve Sjuggerud points out, the market suffered five corrections in the last 12 months of the dot-com boom. That isn’t unusual toward the end of a historic bull market, and it isn’t a reason to worry.

Today, all five of the FAAAM stocks are trading above their 200-DMAs. The long-term trend is up… The bull market is on… And we strongly recommend you own stocks.

Good trading,

Ben Morris and Drew McConnell

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Source: Daily Wealth