Ever since the strong upside reaction to President Trump’s address to Congress at the start of the month, the S&P 500 has been trading in a bit of a sideways range with no new highs since the first trading day of the month.  While the broader market has been treading water, FANG stocks have continued to claw their way higher.  In fact, just last Friday alone, both Facebook and Alphabet (formerly Google) hit 52-week highs, while Amazon.com and Netflix finished the week just shy of new highs.

FANG

The recent strength of the FANG stocks has really helped the group to widen its lead over the rest of the market.  The chart below shows the performance of the four FANG stocks on an equal-weighted basis versus the S&P 500 equal-weighted index, which includes every stock in the index.  Over the last six months, stocks in the S&P 500 are up an average of just under 11%, which is impressive under just about any scenario.  When you compare this performance to the average rally of 18% for the FANG stocks, however, the gains seem rather modest.

The lower chart shows the spread in performance between the FANG stocks and the S&P 500 equal-weight index over the last six months.  While the FANG stocks saw a wider performance spread last October (following strong earnings from Netflix), their lead over the broader market is the widest it has been since the election.  What’s even more impressive about this outperformance is that it comes after a period immediately following the election where the group lagged the market as investors rotated into groups more associated with the “Trump trade.”  Investors have a way of quickly changing their minds!

FANG vs S&P 500 Equalweight

 

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