Jim Cramer: FANG is not the US stock market

As Jim Cramer noted, judging by yesterday's performance of the technology sector, the end of the world has come. But the shares of the FAANG index (Facebook, Apple, Amazon, Netflix, Google) are not the whole market, although they are among the best-performing large-cap stocks this year. Yesterday, Facebook shares collapsed to $ 168 from $ 175 at the start of the week, while Twitter shares fell by 5% after representatives of both companies were questioned by US congressmen and senators. The hearing concerned the use of the two platforms by Russian agents for the propagation of fake information before the mid-term elections this November.

The pressures on Facebook and Twitter shifted to other technology companies like Netflix, Google, and Amazon. NASDAQ (NDX) dropped to 7500.

The index fell to 7500, which is the Fibonacci support level 23.6%. From these levels we expect a continuation of the upward trend. DeMarker points upward from an especially oversold zone.

According to Cramer, however, investors should not focus solely on FANG. As he explains, from a purely fundamental point of view, it makes no sense for an investor to buy Facebook shares, which has shrinking margins and regulatory pressure (a "toxic" combination, as MoffetNathanson called it) when at a similar P/E ratio (price-earnings) 3M can be purchased, a company with growth in sales and a 2.6% dividend.

3M's Technical Picture (MMM.US) is also attractive:

The company has a large exposure to China, which largely explains the strong downward trend since the beginning of the year (coinciding with the deepening of the Chinese stock market). The price is in a low-slope rising channel, breaking the resistance around $ 207 (23.6% Fibonacci).

We will keep track of the price for break outss above 213. At these levels, the price will have broken above the upward channel and will probably accelerate its upwards trend. We will look for short positions around the channel breakout level with S/L around 206.85.

Source: TheStreet.com

Original post: FANG Is Not a Proxy

Image: Jim Cramer Official Twitter