The 'Fab 5' Stocks — And Why They're So Important To The Rally
Investors may find it surprising that out of a portfolio of more than 4,000 stocks, only 28 percent are showing "any form of an uptrend," according to Piper Jaffray's Craig Johnson.
The Analyst
Johnson, a managing director and senior technical research analyst, was a guest on CNBC's "Worldwide Exchange" Thursday.
The Thesis
The stock market is flashing a concerning signal at a time when it is attempting to regain its all-time highs, Johnson told CNBC.
Not only are a fewer number of stocks showing upside momentum compared to prior rallies, but a much smaller number of stocks are responsible for a majority of the upside in the broader market.
The "fab five" stocks — Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT) and Netflix, Inc. (NASDAQ: NFLX) — account for around 80 percent of the performance of the Nasdaq 100 index year-to-date, Johnson said. It's "not healthy" to have so few stocks driving the overall market, he said, adding that an earnings miss from just one of the five names could cause a setback and correction.
"From my perspective, I don't like to see the market this narrow," Johnson said.
Related Links:
A Peek Into The Markets: US Stock Futures Fall Ahead Of Economic Data
25 Stocks Moving In Thursday's Pre-Market Session
Photo of Apple's Cupertino, California headquarters by Daniel L. Lu/Wikimedia.
See more from Benzinga
Goldman Sachs Turns Bullish On NetApp, Upgrades Pure Storage To Neutral
What's Next For Dollar Tree Amid Icahn Interest? KeyBanc Weighs In
Tilman Fertitta Might Be Looking To Buy Caesars Entertainment
© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.