All moves always move beyond what you initially thought was possible. In late March we suggested FAANGs were setting up for a move higher. In our post
“Is “FANG factor analysis” now changing?
Chart of NYFANG, bouncing right on the big must hold level and the 100 day”.
A few days later we followed up the call with a longer note on FAANGs about to take off and in our note, Welcome back FAANGMs, we wrote;
“This is why we like playing a possible FAANGM squeeze from here via options plays instead of deltas. For the long ones, feeling they want to offload tech here, why not think in terms of replacement strategies, i.e sell you stocks and buy upside calls. We also like the profiles of long call spreads for the above logic, offer you less “juice”, but the strategy costs obviously less.”
We did not think it would bounce this much, but fast forward two weeks and the index is up some 16% since that hammer on the 100 day moving average.
This past bounce in the index is actually one of the most violent moves higher, and most have missed it and are busy explaining to the CIO why they loaded up on energy and other rotation trades, and missed the true value trade, big tech at “bargain” levels.
Seen over a few months NYFANG has done nothing and the upper part of the range is still higher, but we are approaching it quickly.