FAANG stocks are finished. Though a controversial statement, a technical analyst at Wolf Research, John Roque, believes it’s true.
Though most notably, if Roque’s correct, a FAANG flop could have serious ramifications for the intermediate future of the market.
The companies that make up the FAANG family include Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Alphabet's Google (NASDAQ:GOOGL). These high-flying stocks are the ones to thank for the market’s success during the past ten years.
The FAANG amalgam brought huge growth, paving the way for other blue chip stocks, which resulted in an equity boom as FAANG stocks “pulled up” the major indexes.
Since 2009 all five of the companies that make up the market’s most famous acronym have reaped great rewards for investors. And even through periods of slower growth, these stocks still make up the “best” companies in the tech sector (all off the FAANG stocks belong in the tech sector).
That’s really the rub. Investors have gladly put their cumulative eggs into one basket since 2009.
And that basket is made of growth-oriented, aggressive tech firms.
As such, the tech sector can be thanked for a large portion of the market’s recovery following the financial crisis of 2008.
And in turn, the tech sector can thank FAANG stocks for its frenzied gains.
Investors have pretty much relied on FAANG to “beef up” the general market for years now.
Though now that those 5 integral stocks are beginning to stall near their all-time highs, there are analysts ready to give up.
In fact, according to Roque, there’s a new gang of mega-stocks that could explode at any time.
Unlike FAANG, this new 5-stock grouping, BAANG as he calls it, has nothing to do with tech.
BAANG!
Barrick Gold (NYSE:GOLD), AngloGold (NYSE:AU), Agnico Eagle Mines (NYSE:AEM), Franco-Nevada (TSX:FNV) and Gold Fields (NYSE:GFI), the BAANG stocks, are all instead directly related to gold, which is at last making a comeback. BAANG has gone out of control during the past few months. For example, the B in BAANG (Barrick gold) is up more than 46% since the 1st of June.
But rather than reverence, Roque’s new index has mostly been met with animosity from those who criticize that FAANG is much more nuanced and profound than BAANG.
Furthermore, it would be foolish to invest in BAANG stocks right now as they’ve just recently blew up in value.
However the cynics fail to notice that Roque isn’t suggesting that anyone ought to run out and buy BAANG stocks or gold right away.
Instead, BAANG was initiated to consider the long-term potential of a handful of the best gold miners.
“We made this index BAANG in homage to the fading FAANG,” Roque explained in an interview tieh Squawk Box on CNBC.
“Gold has broken out but it’s still down way from its highs in the 1900 thereabouts and we think both gold and [BAANG] stocks have more room.”
So, while some analysts have been content to throw stones the new BAANG index, in actuality Roque might have just keyed into the next group of breakout stocks to lead the market.
Yes, in the short-term gold and other miner stocks may seem overbought. But that doesn’t alter the reality that gold is still far off from its highs in 2011, and gold stocks may still end up keeping the market’s head above water in the long-term.
All while the revered FAANG stocks flounder.