FAANG Stocks Analysis – Under or Overvalued in a Covid-defined world?

by birtanpublished on October 3, 2020

It's been the strangest year for stock markets um making all-time highs into february then fell off a cliff as the coronavirus pandemic spread but but since then looking here at the nasdaq 100 you can see just the size of the recovery um off those march lows so a big part of the recovery for stock markets has been driven by big tech um the the names we all know and that's what i'm going to talk about in this video five different companies do they have further to go or actually is this bounce back

Off the lows overextended and actually we're due for something of a correction for the major well-known tech stocks hello i'm david jones from capital.com and this is a slightly longer video than usual but we are covering five different markets in this we're going to take a look at the the so-called fang stocks we're going to take a look at facebook uh amazon apple netflix and google look at some of their recent earnings look at where the share prices gone look at the technicals

See if there's an opportunity and whether we can set a trade up so as usual in this i'll be talking about the companies then dipping in and out of the platform looking to set up these trades and looking at things in more detail if you're watching this and you're not subscribed if i could ask you to subscribe it does help support the channel build our numbers and means we can continue to push out um lots of hopefully interesting and varied comment uh on markets in the weeks and the

Months ahead so let's um let's get things started let's talk about the broader market first of all um we've seen this this great comeback um by stocks off the march lows and selling positive performances for the year today and a lot of that has clearly been driven by the tech sector particularly the sort of companies we're going to be talking about uh in this video look at the nasdaq that has rallied by 65 the nasdaq 100 off those march lows so an incredible

Comeback since june of this year the nasdaq 100 has been setting fresh all-time highs and i think there are very few of us that would have expected that when we were in the eye of the coronavirus storm back in march and clearly the so-called stay at home tech stocks have done well uh out of the lockdown that we've seen around the world it does seem obvious in hindsight of course but the likes of amazon.com clearly uh much more online shopping as uh you know grocery stores are locked

Down and people are encouraged to stay at home netflix stuck at home not much to do what should we do let's watch a box set on netflix ad is more subscribers so these companies done particularly well but as usual i think the question is when we look at all of these um has the run gone too far clearly no market goes in one direction forever are we seeing uh a favorite word in recent videos on gold and silver that this fomo effect fear of missing out ever increasing prices bringing more

And more buyers and just setting ourselves up for a big correction let's take a look at these individual stocks let's get started so let's kick things off with um the granddaddy of social media so so facebook we had its latest earnings uh out in july and back then it showed actually its slowest growth in revenue since it first came to the market since the i since ipo'd in 2012 but despite that slower growth

It still beat market expectations and earnings clearly company results are all about expectations if the market's expecting that does it come in here does it come in here but we did see facebook beat expectations it said it had grown its um number of users again continuing to to spread its tentacles around the world so it had 3.14 billion users uh versus 2.99 billion in the previous quarter earnings per share were really

Quite an incredible beat in the end um facebook earnings per share in the latest quarter were a dollar eighty that was versus uh about a dollar forty dollar thirty nine that the market was expecting so a massive beat there and as you'd expect a positive reaction by the shares so we've seen a strong performance by facebook they've moved out to um all-time highs in may classic breakout you know when we see this in lots of stocks you know from a charting momentum point of view if it breaks out

To an all-time high it does suggest strength in the market we've seen it in other markets for example like gold more recently and this means a really positive performance so for the year to date at the time recording facebook shares were up um around 28 for the year today so let's take a look at the chart look at the levels and see if there's an opportunity so here's the really strong recovery uh in the nasdaq um broke out to fresh all-time

Highs in june of this year and has carried on powering higher and you know the big names the amazons um apples netflix facebook they have all played a major part in dragging um broader stock markets higher so in this video we're going to take a look at five of these so called the so-called fang stocks in more detail i'm going to jump backwards and forwards talk about them come on to the charts see if there are trades to do and um see if we can maybe

Make some money over the next the next few weeks at the moment if we take a look at existing trades we do have a trade running on an apple uh we bought um back 24th of june when they were trading at 367. they've moved uh about a hundred dollars almost a hundred dollars in our favor so we do have some exposure to tech stocks but we're going to see if we can add to that when it comes to the other trades the other big winners at the moment

Natural gas we did a video on that earlier in the week take a look at that if you want to and um that euro us dollar that has benefited from the the dollar weakness but maybe things are changing and i did add a dollar yen trading beginning at the beginning of the week as well but let me talk a bit more about these uh major tech stocks then we'll jump back and see if there are opportunities uh still to come in the weeks ahead

So here are the moves in face facebook so for all of these these stocks i've got a 20-day moving average on the white line you can see here we'll have a look at the rsi to see how extreme or otherwise it is uh in the short term but facebook in march traded as low as 140 and then up to that most recent high uh you can see it pretty much doubled uh off those those march lows we had a bit of i think what's interesting here is what was going on sort of may

Through to the end of july which was of course those latest earnings um we had a bit of sort of to and fro uh that old all-time high that actually goes back goes back to 2018 so for a couple of years 220 a share have been uh quite the barrier uh for facebook um broke through it chopped around and finally uh found some more legs again uh coming into august after the latest earnings and i do wonder does this mean for the rest of the year we're

Going to see facebook continue to push higher you know we've broken out once breaking out again so what i want to do now is focus on the trend from march and i think there's a there's definitely an order that can be placed here to see if we can jump in on this trend so here's our our trend line since march that trend line is coming in currently around 240 dollars a share at the time of recording ahead of the market open facebook shares closed the previous day at 262. so for me i'd quite like to be a buyer of facebook

Looking at the rsi down here um it had popped into uh overbought beginning of august not surprising given the strength um it's come out of it slightly but we're still pretty much at an extreme so what i would like to do um is be a buyer if we get maybe a bit more of a sell-off not too drastic a sell-off but perhaps if we drifts back to 250 which is really only the lows from the first week of august so i'm going to put an order in to buy at 250 the most aggressive place my stock would

Go i think would be underneath these lows just before the earnings late july lows around 225 let me give it a bit more room though i'm going to put a stop the other side of um well 20206 with the lows in june let's say i go 200 on a stop so i want to buy a dip back to 250 put a stop in 200 nice easy numbers for me to remember and i think for me as long as these old levels hold this old low from june holds um that trend is

Still very much intact let's uh let's put up let's put our order in so like i say i'm ahead of the market open the market opens in about an hour um the us markets i wouldn't buy though if the price drifts to uh 250 a share buying six shares at 250 if that order gets filled put a stop loss in uh at 200 a share and it's the the usual risk slightly more 228 pounds is what we're risking we normally risk around a couple of hundred pounds on these trades let's uh send that send that one through

So that order's gonna sit there um so what i'm really looking to do is pretty straightforward just just buy into this trend that trend still seems strong we've broken out we've broken out again so for me any dips in facebook still look like buying opportunities next up we are going to talk about the online retailing giant um that is amazon amazon.com it's its latest earnings um absolutely smashed through uh analysts expectations the top line came in strong revenue of 89 billion dollars versus about 81 billion expected from amazon and clearly of

Course this this is a company that has benefited from the global lockdown after an initial wobble as stock markets fell around the world uh coming into march because of the spread of the virus you know quickly investors saw that well who's going to do well a company that can supply almost everything you need uh online so we did see we've seen a massive boom uh in business for amazon and of course a corresponding lift in the share price but amazon of course um isn't just

Online retailing it also has amazon web services that provides cloud computing to so many different companies around around the globe and the quarterly revenues here had done well they were up by around 29 uh year on year so a strong performance it seems from all aspects of the business which translates into a great return for investors at the time of recording if you look at amazon share price it's up um i think a frankly staggering 70

For the year to date so has it gone too far where's the opportunity let's take a look on the platform here's the amazon chart and what an incredible success story going back here on the charts at what 2013 when the shares were about 250 dollars a share that sort of level 3170 a share and the latest closing and what i want to focus on is uh really what's been going on this year so 2020 let's just zoom in to that bit of the chart take a look at the moving average have a look at the

Trend and see if there's an opportunity there so here's the year so far so they they traded off they fell off those highs at two thousand two hundred dollars a share dropping down to sixteen hundred so not quite a thirty percent fall from amazon but you can see um pretty much doubled since those march those march lows you know clearly and not surprisingly the lockdown has driven a lot of people a lot more people than normal uh to online shopping and has boosted

Amazon's business let's just pick up on this trend off these march lows like we did with facebook so at the time of recording um that trendline has done a great job we've got loads of touches uh on the trend line the 20-day moving average has done an okay job as well as sort of providing support it doesn't spend that long below the 20-day moving average when it does go below it and it quickly flips above uh so for me i'd probably like to be a buyer uh up here we've maybe for fans of patterns we've maybe got a triangle

Pattern going on which is normally seen as a pause in the trend before that continues the tightest i'd want my stop is the other side of uh what 2900 that sort of level but actually probably to give it a bit more room i'd place my stopper below 2600 which gives me an issue actually because with the shares trading at 31.70 if i put a stop at two six uh then my stop loss even on one share is going to be uh 500 away from where uh the market's trading

And on this size of account um where i risk i limit the risk per trade per trading idea to 200 pounds um i can't even buy uh one share so maybe we will see share splits from amazon further further down the line so for me because of the risk involved there it's not a trade i'm going to take in this instance but um that trend still looks pretty strong you know be looking for a run back up to these old highs uh run about 33.50 that sort of area and for me it's only if it falls below

2-6 does it look like that trend in amazon is over it's interesting it has lagged a bit uh since uh since mid-july we are seeing this bit of a sideways consolidation it'd be interesting if we can wake up and break back up to these old highs and perhaps start a new trend higher but i'm going to have to pass on a trade for that one next we're going to take a look at a company that remains a darling amongst uh many investors that is of course apple so its latest quarterly earnings

Showed um the best ever revenues for the company and these were up 11 year on year earnings per share came in at 2.58 a share that was against i think around about 2.10 expected so beating expectations here and this has seen the shares yet again with apple it's a recurring story the shares have moved out uh to all-time highs so this means for the year to date the share price is up uh by more than 50 percent uh so far this year so again a cracking return for investors

We do have a four for one share split coming for apple that's um i think at the end of this month so what this means if you hold one share of apple uh you'll end up with four so of course uh the share price if it's trading at 400 will then be trading at 100 it doesn't affect the value of the company uh but companies do this they say uh to try and widen the share ownership make it appealing to other investors but anyway let's jump into the chart take a look at apple and see where the opportunity might be

So here's um here's apple just as a reminder let's remind ourselves the existing trade on apple so the apple trade bought six at 367. uh the market's 460. i have moved the stop up already to 390 on that so locking in some profit but giving it room to move higher again so i mean um a risk-free trade with a bit of profit on apple at the moment so i'm quite happy to add to that so apple shares uh went from above what 320

A share 320 a share sliding down to 220 and since then um great recovery you can see the 200 day another 200 days sorry the 20 day moving average a great job on the way up uh providing support little dip below in late july but the market recovered and uh and off it went again to trade well pretty much at the moment at all-time highs again this is it trading pre-market so you can trade apple pre-market with us trading at 460 at the moment uh but all-time highs yet again yesterday so for me if

Something's making all-time highs you know i'm not looking to sell i'm not going to sell into that sort of momentum i want to be a buyer the only question is am i a buyer or more strength or do i wait for a bit of weakness uh to be a buyer i think what i'm going to do again with apple like we did with facebook is place an order to buy if you look at the the rsi down here we're a bit extreme well pretty extreme on the rsi we have been extreme that isn't uncommon in strongly

Trending markets so it can be an expensive game to wait for rsis to unwind before you jump in because you can miss out on further strength but for me what i will do i'm going to put an order in uh to buy just at 420. so about 10 below where we're trading now put an order in to buy it 420 and for a stop loss i go um i've got the other side of these low so these lows right on that trend line july the 24th trendline stop what's in at 3 40. so i'm a buyer at 420 with a stop at 3 40. let's set that up

So i'm stretching my risk again a bit on this one but i'm going to buy four at 420 if the price trades to 420 if that order gets filled at 420 then put a stop loss at 340. and then i'll look if the market moves in my favor after if i do get filled i look to move the stop up and the risk the normal risk is uh 243 pounds so a bit more than our normal couple of hundred pounds but i don't expect all these orders to get filled let's place that limit order now of course uh if we could uh

Wind the clock back and if we thought about it one one company that was potentially going to do really well out of everyone being um stuck in at home was uh streaming uh video providers uh netflix of course has had seen a real benefit uh in users so let's talk about this one in a bit more detail so its latest earnings were announced uh in mid-july and we had actually something of a mixed bag in the end of earnings for netflix we saw them um coming worse than expected in terms

Of earnings but much better than expected in terms of their top line in terms of revenue so the market was expecting earnings per share of about uh 1.80 um they missed that by a fair bit i suppose they came in at 1.59 but new additional subscribers is where we saw the surprise perhaps not surprisingly the market was expecting around 8.2 million new subscribers to be added and by the end of it netflix has added slightly more than 10 million new subscribers in the quarter it's

Guidance for the quarter coming up i think may have been a disappointment for investors it said that they expected perhaps two and a half million new subscribers in the next quarter the market was expecting slightly more uh than five million so netflix taking slightly cautious outlook after the surge it experienced during the lockdown period and i think they have sort of paid the price uh on the market if we have a look at the shares they have slipped uh since those numbers

Came out but is this an opportunity and the share price is still up almost 50 for the year let's take a look at netflix in more detail so here's netflix we go back to uh july 2018 and you can see the high was in around four dollars uh 425 sorry and uh finally started pushing through it although not that convincingly but sort of april may this year then we had that surge higher up to 5.75 and then we've had these earnings that have come out they've been slightly

Disappointing so um again i think what we need to do here let's pick up maybe there's a short sale in here let's pick up on the trend from the march lows so there's our there's our trend off the march uh march lows and i do wonder if maybe short selling netflix is an idea here to perhaps balance off some of the other bullish positions that we're planning on taking you know perhaps they have overshot to the upside and um their guidance was quite cautious for the next

Quarter so we had this trend where the prices moved up that trend did a good job it has fallen out the trend in the last few days or so we've had you know a fairly decisive move so far below this this uh 20-day moving average we'll see how that how that one turns out the rsi is uh has approached oversold but hasn't got too oversold but i just wonder is netflix the one that has got slightly ahead of itself so what i am going to do i'm going to sell short but i'm going to put a stop loss um i think perhaps the other side

Of the mid july highs so those mid july highs up at 5.75 um so i'm going to sell short let's say 585 for a stop let's um let's set that up so i can sell fractional shares here and these are trading ahead of the market open so i can sell what i'm going to do sell 2.6 netflix where the market is now 482 put a stop at 585 the usual risk of a couple hundred pounds let's send that through so that's it i've opened the position here so um what i'm looking at doing

Really is is are we gonna see netflix drift that that's my view here have we seen it sort of spike higher reverse quite quickly off those new highs and perhaps we'll see it uh slide a bit from here pulling back more into that range from march april sort of round about 400 perhaps even sub that we'll come back to it and see how it does and finally let's take a look at google so alphabet google uh saw its earnings decline for the first time year on year

If we compare the quarters declining in revenue i should say and again perhaps this isn't surprising you know we saw this this massive economic shock of the coronavirus locked down and plenty of advertisers really pulling their spending on platforms such as google to try and see what was going to happen next although the company did say that as the quarter came to an end it did see spending and revenues um getting back to a more normal basis

I think we've seen this with lots of companies after that initial shock you know everyone has to clearly try and adapt to what is the new normal alphabet itself said that it cut its own spending in half and it put a freeze on hiring in the second half you know due to the uncertainty around the the economic outlook um after these lockdown periods were eased but its earnings still came in better than expected despite that drop off in ad spend it still saw earnings of um just above

Ten dollars a share and that was versus the the eight dollars 21 the market was expecting so still a strong performance the shares are positive for the year perhaps a bit more modestly positive than some of the others we've looked at but google shares google alphabet still up by about 10 for the year today let's take a look on the platform and see if there's an opportunity here because they've lagged behind the rest and here's our google chart this really has been um the laggard relatively speaking but but

Look at some of the moves we did uh coming to 2020 selling fresh all-time highs up at 15.25 that then a significant reversal losing about five hundred dollars so i think what we need to focus on is what's gone on this year uh for google so google sells off uh down near a thousand dollars a show we get this recovery let's pick up on that trend and a bit like netflix at the moment it is sort of stuttering around that trend line so i think that

There are two approaches here if you think those sort of uh those moves in mid july early august was the start of a google breakout pushing through those old february highs there's an argument to be a buyer uh where we're trading now around about 1500 a share with stops the other side i would say the closest i'd want to stop the other side of the june late june lows and they're coming in around 13.50 a share

There's also an argument for going short if you think that google you know really hasn't pushed out to all to fresh all-time highs for a couple of weeks now lagging behind the rest of the market if you thought well actually maybe google's rolling over there's an opportunity i think to go short here you know selling at 15 16 a share would stop somewhere above uh 1600 a share i think what i'm going to do i'm going to wait this out we'll come back to it i think it's a little bit inconclusive

At the moment it's still hugging onto that trend line so perhaps we'll have a bit more of a last-minute surge uh from google and it picks up strength from here but it's uh a bit inconclusive this break the the break through the old highs was a bit inconclusive as well so i'm really not quite sure what to make of google at the moment so i think um sitting on your hands and not doing anything is as much a trading decision as buying or selling so we'll leave that

One there we'll wrap things up there i hope you found it interesting we will see what the second half of the year brings for these tech giants but from me david jones and capital.com good luck with your trading for more trading videos just like this please subscribe to our channel

Related Videos

from daily forex this is chris taking a look at the uh bitcoin market here you can see that we have uh found the market to be bullish we have broken above the ...
James fake revenue at deutsche bank has risen by 47 in the third quarter has this good momentum continued in the fourth quarter as well look we're continuin...
from daily forax this is chris taking a look at the um us stock indices this is the s p 500 and you can see that the s p 500 has uh rallied quite a bit did pul...
The capital position now and the confidence you have to deploy that dividend well indeed we have uh we've had a uh a very strong quarter um in which uh you ...
Hi everyone my name is adita and a few years ago i got divorced and became a single mom of two kids and that's when i started to look for ways to invest my ...
Have you ever thought of the true value of gold I mean really the value of something isn't its price it's what you can buy with it that is the true valu...
Hi this is vlad from effects empire euro dollar failed to settle above the resistance at 1.1870 and is trying to get below the support at 1.1830 if this attempt...
from daily forex this is chris taking a look at the uh crude oil marking cwti has gapped a little bit lower and then basically did nothing so uh at this point ...
Rupert what does this all mean for for equities but in general actually asset classes would you buy right now yeah so we are still broadly constructive on risk ...
Today I'm looking back at the Tesla stock on March 17th I did an analysis based on my ambassador diamond analysis the IDB a and I suggested that after its s...
The thing is if it's a legitimate expense and you are legitimately working from home take it you're literally throwing money leaving money on the table ...
from fx empire this is chris taking a look at the euro dollar and you can see that we are reaching above 118 as new york gets on board and perhaps trying to ma...
from daily forex this is chris taking a look at the euro and the pound you can see the euro has fallen a bit during the trading session here on friday as there...
The crude oil price has had a great recovery off those april lows but it does appear to be struggling over recent weeks so given the resurgence of the coronavir...
The recovery in silver continued into july and in the last week uh the price went somewhat parabolic moving from 19 up to 26 and you can see the sort of volatil...
Now one of the things that almost all millionaires have in common is they have exceptional I mean exceptional communication skills because they recognize that c...
Hi this is vlad from effects empire silver is currently trying to settle above the nearest resistance level at 23.30 if this attempt is successful silver will g...
from daily forex this is chris taking a look at the gold and silver markets you can see gold has smashed into this little short-term downtrend line that i have...
So tell us a bit more about the survey what what are your clients telling you about the lessons learned from this pandemic and what does it tell us about the fu...
At first glance ichimoku charts um can seem somewhat intimidating with a lot going on when we're looking at markets but they're also a really powerful w...