A noteworthy observation in the stock market this year is that popular technology stocks are outperforming broader indexes.
Could 2020 be the year of FAAMNGs — Facebook FB, Apple AAPL, Amazon AMZN, Microsoft MSFT, Netflix NFLX and Google parent company Alphabet GOOG, GOOGL ?
The answer is “yes” if current trends continue. However, the year is still young. There is many a slip ’twixt the cup and the lip, as they say.
To gain an edge, let’s look at segmented money flows. Segmented money flows are like an X-ray of stocks. Just like a doctor uses an X-ray to see what is going on below the surface, prudent investors can do the same with stocks.
A once-in-a-blue-moon occurrence has just happened in popular tech stocks. Let’s explore the issue with the help of a chart.
Please click here for a chart showing segmented money flows in 11 popular tech stocks. Due to the significant outperformance of these stocks, it makes sense to look at them in addition to the Dow Jones Industrial Average DJIA and broad ETFs such as S&P 500 ETF SPY, Nasdaq 100 ETF QQQ and small-cap ETF IWM.
Note the following:
• The single most important observation from the chart is that, of the 33 money-flow-related data points, not a single one is neutral or negative. This happens only once in a blue moon.
• As shown on the chart, short-squeeze flows are extremely positive in Tesla TSLA stock. Momo (momentum) crowd money flows are also extremely positive. Even the smart money has jumped on Tesla stock with mildly positive money flows.
• Nvidia NVDA, AMD AMD and Netflix stocks are also undergoing short squeezes and short squeeze flows are extremely positive.
• Apple stock has doubled from its low. In spite of the rise, momo crowd money flows are extremely positive in Apple.
• Facebook stock has the top risk-adjusted ranking while Tesla has the top non-risk-adjusted ranking.
• Traditionally, momo crowd flows have been negative in Intel INTC stock but now the momo crowd has jumped on board Intel too. In the past, the momo crowd has mostly been focused on AMD stock in the semiconductor sector.
• Google has the No. 2 risk-adjusted ranking.
• After stagnating late last year, Amazon stock is on the move again. As shown on the chart, smart money flows are mildly positive, momo crowd money flows are very positive and short-squeeze flows are positive.
• Chinese stocks are on the move too. For U.S. investors, it is easiest to focus on Alibaba BABA stock. Smart money flows are positive in Alibaba stock…Read more at MarketWatch.
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