The S&P 500 popped to record highs on Wednesday, the first day of the Biden presidency. While there were some shocking and unprecedented events along the way, most people believed there would be a peaceful transition of power and that included most investors. Despite the political rancor and discord of the last several weeks, the stock market barely budged from record levels.
The broad market has been notching numerous new highs over the last few weeks, but notably absent was strength in the high-flying FAANG stocks. These best-of-the-best companies have been struggling to pull themselves off of recent lows and were stuck in consolidation patterns.
Some of this underperformance makes sense since Democrats have been vocally targeting these titans of tech for their anti-competitive business practices. Add in last week’s moves to censor Trump and popular right-wing social media platforms and the storm clouds were swirling around these former market darlings.
But as the popular saying goes, it is darkest right before the dawn. Tuesday night, Netflix (NASDAQ:NFLX) smashed earnings expectations and the stock surged 17% to record levels. Alphabet (NASDAQ:GOOGL) also popped to record highs. And Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), and Apple (NASDAQ:AAPL) all had good days too.
The biggest red flag of the S&P 500’s recent strength was the lack of participation by this country’s best companies. But as the saying goes, better late than never. The FAANG stocks are getting their mojo back. Expect them to not only catch up to the indexes, but actually start leading the charge higher.
There is no reason to fight what is working. Continue holding for higher prices and keep moving our trailing stops up.