21May11:28 amEST

Market Prima Donnas Set a High Bar

With a market cap nearing 2/3 of one trillion American Dollars (freshly-printed and all), Facebook is undoubtedly turning into one of the modern diva stocks of this century, heretofore. 

Since the lows March, the rally FB has turned in has been nothing short of magnificent, seen below on the zoomed-out daily timeframe. FB, one of the "FANG" names, has been right there with AMZN in terms of roaring back to give bulls hope for an economic and market recovery the likes of which will see us never so much as flirting with those March lows again. 

While the aggressive Fed and government response was much quicker and decisive, backed up with constant easing rhetoric, than what we saw from the Bernanke Fed back during the 2008 crisis, the issue is at what point the initial sugar rush wares off. "And then what happens?" is a question Warren Buffett once said is one you must always ask in economics (we all know by now that Mr. Buffett is playing things rather closely to the vest these days with his Berkshire money).

In this case, if we see FB fade at these extended levels (above upper Bollinger Band, shooting passed prior highs), I would look for a deeper pullback into the seasonally-tougher month of June to gauge just how lasting these diva stocks truly are once the initial sugar rush runs its course. Consider how high the bar has been set in terms of expectations for all those newly-opened retail brokerage accounts since March, for example--Any real hiccup to that is likely to set off an ugly chain of events. 

Stock Market Recap 05/20/20 ... Stock Market Recap 05/21/20 ...


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