FAANG and the Cloud Losing Momentum – Now What?

Danielle Shay on CNBC Trading Nation
Danielle Shay discusses potential run into earnings trades in XLP on CNBC.

Click on the image above to learn more and watch Danielle’s segment on CNBC. 

This week, on CNBC’s Trading Nation, I discussed the stock market condition over the course of the last seven weeks. What I’ve seen, is that we’ve had a loss of momentum in high growth stocks, including the cloud computing and cyber security industries, recent IPOs, and several stocks in FAANG, most notably Netflix, Amazon and Facebook. I’ve also seen money flow going into safe haven areas of the market, like gold and bonds, along with value areas of the market such as consumer staples (XLP) and utilities (XLU).

What does this mean for investors and traders?

Typically, in a strong market, we are going to see hot momentum stocks trading higher each instance when the market pulls back. The market is always going to ebb and flow, and after down days in the market, its been typical that the momentum stocks listed above have climbed higher rapidly after each downturn. Over the course of the last seven weeks, that hasn’t been the case, which leads me to believe that the stock market is losing momentum to the upside.

Now, this isn’t all bad, because there is always a bull market somewhere, and right now, that upward trending market is in utilities and consumer staples. A couple of my favorite consumer staples stocks include Costco (COST), Hershey’s (HSY), and Estee Lauder (EL). These stocks have strong fundamentals, as well as technicals, and have held up really well despite on-going political tensions.

I am also eyeing this sector for an upcoming, ‘run into earnings.’ which is a typical trade I do every earnings quarter. I like to focus on strong, relative strength names and trade them in the options market as they run higher in anticipation of their quarterly earnings results.


Want more information? Follow me here by signing up for my free newsletter, at, or in my Mastery program which you can find at

Up Next...

Intraday to Swing Trading Indicator

 Since Danielle is out this week for spring break, Allison Ostrander, Director of Risk Tolerance, will cover how she’s used her Divergent Bar indicator for short-term earnings trades. This tool has allowed Allison to take low-risk trades prior to an earnings announcement with a good probability of following through with a higher high. She’ll also … Read more

Read More

The Monday Kickoff

Hey Traders! It’s only Tuesday, yet so much has already occurred in the market. Bank news rattled the markets last week and continued rattling them over the weekend. CPI data hit this morning, and it was in line with expectations. I view that as a positive because anything other than an inline reading could have … Read more

Read More

The Relative Strength Winners

The indexes have been sloppy, in addition to being relatively weak. The choppiness has some benefits, though, as this choppiness has meant that squeezes are consolidating everywhere. I can’t say I recall a time in which I have seen so many squeezes across so many different indexes and sectors simultaneously. What does that mean? It … Read more

Read More

Subscribe Today!

Want to walk the path to trading success together? Join Danielle’s “Five Star Trader” E-Letter for market insights, tips, tricks, and special bonuses.

Sign Up Now