FANG stocks are losing their bite.
In the last three months, shares of the once high-flying group of technology names — Facebook, Amazon, Netflix and Alphabet (the parent company of Google) — have fallen a respective 7, 25, 22 and 4 percent. The move has come as tech shares overall have taken the biggest brunt of the recent bout in volatility, although Alphabet has recently been locked in a horse race with tech giant Apple to be the world’s most valuable company.
The bloodbath in technology stocks is best captured in the decline of the Russell 3000 Index, which has lost more than $514 billion since the start of 2016, S&P Capital IQ data showed last week.
According to one trader, there’s even more pain in store for one of these names over the next few months.
“Amazon was one of the best-performing stocks in 2015 but it’s significantly underperforming in 2016,” Todd Gordon told CNBC’s “Trading Nation” last week. The e-commerce giant’s shares are down 25 percent since the start of the year and the S&P 500 has fallen around 8 percent. “We have Amazon making new year-to-date lows while the S&P 500 pulls back, but is well off of its early 2016 low.”
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Looking at a chart of Amazon, which has recently entered a bear market, Gordon noted that the stock is now trading below its uptrend channel. Zooming in further, he noted that its August low of $451 could provide support on the way down. “That should act as a magnet and hopefully support to the downside,” said the founder ofTradingAnalysis.com and a CNBC contributor.
A move down to $451 would put Amazon shares nearly 10 percent lower than the current level of around $500, and 35 percent off its recent all-time high of just under $700. On Friday, Amazon’s shares closed just above $500.
“If we get confirmation that the broader market wants to push lower, you can be sure that technology is going to lead us to the downside,” said Gordon.
Despite the dismal performance of late, Wall Street is still fairly bullish on Amazon. Of the 47 analysts who cover the stock, the average rating is a “buy” with a $745.41 price target, per FactSet.
[“source -cncb”]