U.S. equities are suffering a bout of profit taking on Tuesday after a very strong start to the month, with investors spooked by a renewed upward surge in long-term Treasury yields. The 10-year yield is moving towards the 3.1% threshold amid ongoing Federal Reserve policy tightening, higher energy prices, and worries a wave of wage-push inflation is just around the corner.
Technology stocks in particular are getting hit as many nudge up to major technical resistance levels. The latest Bank of America Merrill Lynch fund manager survey revealed that these stocks, for the four straight month, remain the most overcrowded trades on Wall Street. And are thus vulnerable to reversals.
This is particularly true for the so-called FANG stocks. And what’s more, all 4 the original FANG stocks are battling other headwinds that might stunt their growth in the near term.
Here’s a look at each of the FANG stocks:
Why Are the FANG Stocks Hitting Resistance? Facebook (FB)
Facebook, Inc. (NASDAQ:FB) shares have enjoyed a massive 25% rally out of its late March lows thanks to fading concerns about the Cambridge Analytica data scandal. Solid earnings and impressive user metrics did much to bolster confidence. But shares began their recovery earlier, during CEO’s Mark Zuckerberg testimony in front of Congress, suggesting that the scandal won’t continue to plague FB stock.
But the bulls are now contending with resistance form the February/March highs, resulting in some profits taking and a possible reversal to its 200-day moving average.
The company will next report results on July 25 after the close. Analysts are looking for earnings of $1.67 per share on revenues of $13.3 billion. When the company last reported on April 25, earnings of $1.69 beat estimates by 36 cents on a 49% rise in revenues.
Why Are the FANG Stocks Hitting Resistance? Amazon (AMZN)
Amazon.com, Inc. (NASDAQ:AMZN) shares are hitting triple-top resistance capping a sideways range going back to early March. after Seattle’s city council voted in a employee headcount tax to help address the homelessness crisis. With Amazon on the hook for around $10 million a year, it’s threatened to reevaluate its hiring plans in the city.
This could also represent the start of a wider populist backlash against the company, with even President Trump threatening increased regulations and oversight.
The company will next report results on July 26 after the close. Analysts are looking for earnings of $2.42 per share on revenues of $53.3 billion.
Why Are the FANG Stocks Hitting Resistance? Netflix (NFLX)
Netflix, Inc. (NASDAQ:NFLX) shares are bonking on a messy looking head-and-shoulders reversal pattern with resistance from its March and April highs. Shares are up more than 70% since December and have more than tripled since late 2016 thanks to ongoing success in executing on its exclusive content strategy driving solid user growth. But with competition coming (Walt Disney Co (NYSE:DIS) is set to launch its own over-the-top service) and production costs rising fast, further profit taking could be in order.
The company will next report results on July 16 after the close. Analysts are looking for earnings of 81 cents per share on revenues of $3.9 billion. When the company last reported on April; 16, earnings of 64 cents per share beat estimates by a penny on a 40.3% rise in revenues.
Why Are the FANG Stocks Hitting Resistance? Alphabet (GOOG)
Alphabet Inc (NASDAQ:GOOGL,NASDAQ:GOOG) shares are bonking on resistance from their mid-April highs, setting up another test of the 200-day moving average for support. Investors have been unimpressed by recent hardware launches and a possible data-related regulatory blowback driven by Facebook’s missteps.
The company will next report results on July 23 after the close. Analysts are looking for earnings of $9.70 per share on revenues of $32.3 billion. When the company last reported on April 23, earnings of $9.93 beat estimates by 65 cents on a 25.8% rise in revenues.