FANG to the rescue

• Posted by Greg Harmon
• on May 5th, 2016

A few months ago all the talk in the equity markets was about the FANG stocks. Facebook, Amazon, Netflix and the company formerly known as Google made up the acronym. These stocks were the market generals, leading the market. If they were up then there market rose, if they were down the market fell. Then a funny thing happened. they stopped moving together all the time. I have not heard about FANG since.

But today FANG showed up on the bullish scan again. Not the group of 4 stocks, but Diamondback Energy whose ticker symbol is FANG. And this stock looks ready to strike. The weekly chart below shows the price action since its IPO in October 2012. After a strong initial run higher to a top in June 2014, the stock has moved back and forth in a tightening consolidation. The price action has built an ascending triangle over this time.

A break of the triangle to the upside gives a target to 125. And it looks to be trying to do that right now. It reported earnings yesterday and jumped up over the resistance levels in place from 2014. A close over 86.50 on Friday and continuation over 90 would seal the trade to the upside.

The Momentum is strong and building. The RSI is in the bullish zone ad rising and the MACD rising and bullish. The price is following the 50 day (10 week) SMA higher like it did on the initial run up. And that 50 day SMA crossed up through the 200 day (40 week) SMA in a Golden Cross about 3 months ago. With 10% of the float short, this energy company also has fuel to push it higher.

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