The Nasdaq registered its best weekly gain of 2019 this week rising 3.9%, and that was with a big decline Monday which slipped 1.6%. It was aided largely by the semiconductors coming to life, as the SMH jumped 6%. In recent weeks M&A activity has surfaced with CRAY and CY being taken out (MLNX was taken out earlier this year). Software, via the IGV, added 3.7% accompanied by the strongest weekly volume in 8 months, with the help of names like TTD screaming higher by more than 23% this week. The Nasdaq did quickly recapture its 200 day SMA this week, which has been flatlining all throughout 2019, giving it a trend difficult to ascertain for both bulls and bears. It is hard to believe at one point this week the tech heavy benchmark was in correction mode down more than 10%, but it CLOSED at highs for the weekly range and 6.2% off intraweek lows. Not the type of quick V shaped recoveries we had become accustomed to, but ignore the price action at your own peril.
What if FANG Wakes Up?
That former incessant chatter that the FANG names were responsible for the vast majority of gains has quieted down as of late, and for good reason. They have lagged, and below is a good illustration of that to some “old tech” names such as MSFT and CSCO. Three of the four names in the well known acronym are in or very close to bear market mode. FB is off the most currently down 215 from most recent 52 week highs, even after CLOSING nearly 8% off intraweek lows this past week. AAPL had its best week in 10 months rising 8.6%. GOOGL has the worst looking chart of the 4 in my opinion, and is the only name below both its 50 and 200 day SMA, and trades one half of 1% from an upside gap fill. I am not a fan of buying laggards, or mean reversion, but if these names begin to participate in any meaningful way that will give a nice tailwind to the overall markets.
The saying goes “a rising tide lifts all boats”. If a comparison to stocks could be made with that adage, it would be that all stocks rise in a bull market. That is mostly true, but the key is for salty stock pickers to select the right ones. If a market is up 15%, the leaders with often rise by double that amount or more over an extended period of time. Below could be a good example of that with the chart of PLAN, and how it appeared in our 6/3 Technology Report. This name shrugged off a fragile market recently and this week stormed higher by more than 10%, nearly tripling the weekly advance of the IGV.