How to play the staggering move in tech stocks
This article appears courtesy of RiskHedge, LLC.
FANG stocks are on fire.
And there’s a lot of money to be made when you play it right.
As you might know, the famous acronym “FANG” stands for Facebook (META), Amazon (AMZN), Netflix (NFLX), and Google (GOOGL).
Jim Cramer coined it back in 2013 when he recommended those four stocks to his audience.
In 2017, Cramer added Apple (AAPL) to the roster, which gave birth to “FAANG.”
Of course, this wasn’t just a clever acronym. Buying FAANG was a winning strategy for years.
On average, FAANG stocks returned an incredible 339% from 2017 to 2021.
All you had to do to crush the market was buy FAANG stocks!
That all fell apart in 2022.
But lately… the stock market feels like 2017 all over again.
- Right now, mega-cap tech is blowing everything else away.
If all you did in January was buy the colossal tech stocks like Microsoft (MSFT), Apple, and Nvidia (NVDA), you smoked the market.
The chart below says it all. It shows the performance of the NYSE Fang Plus Index, which tracks 10 large-cap technology stocks, including Microsoft, Google, and Nvidia.
Since November, this index has rallied 93%!
That’s a staggering move. Remember, this index is made up of the world’s largest publicly traded companies.
Source: StockCharts
- “Does this mean I should buy FAANG here?”
At this stage, I have very little interest in that.
The easy money in FAANG has already been made.
Now, the easy money will be made in a different group of stocks I’ll show you below.
I say this for a couple reasons.
For one, this index just tried to break out to new all-time highs… only to get “rejected.”
That tells me mega-cap stocks need more time before they can reclaim their 2021 highs.
The group is also extended.
The NYSE Fang Plus Index is up the last eight weeks in a row. In other words, mega-cap stocks have basically gone straight up for the past two months.
They’re due for a breather… or even a pullback.
That would be normal and healthy.
But I’m not expecting money to leave the stock market…
- Instead, I expect to see “rotation.”
This is when money moves from one area of the stock market to another.
During bull markets—like we’re in right now—money rotates from strong sectors to ones that have been lagging… allowing them to play “catch up.”
That’s why we’ve been focusing on leaders in industries outside of tech in my new RiskHedge Live trading room lately.
We’ve bought a uranium miner, a coal stock, and an industrial machinery company.
Some folks might call these “boring.”
To me, making money is never boring. The setup in these stocks suggests we can potentially make 25% to 40% or more within weeks.
We’re positioned to profit when money rushes out of tech and into other areas of the market.
Which, based on my experience, has a very high probability of happening in short order.
If you want to join my new trading room as a beta tester to capitalize off this rotation, spots are still available. When money moves from one sector to another, it tends to happen quickly. (And my publisher has the right to pull this invitation at any time.)
Go here to review the details and secure your spot.
Justin Spittler
Chief Trader, RiskHedge
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This article appears courtesy of RiskHedge, LLC. RiskHedge publishes investment research and is independent of Mauldin Economics. Mauldin Economics may earn an affiliate commission from purchases you make at RiskHedge.com