The stock market needs the so-called FAANG stocks to be “unified and consistent” for it to head higher into the new year, veteran trader Art Cashin told CNBC on Monday.
FAANG stands for Facebook, Amazon, Apple, Netflix and Google parent company Alphabet. The group, which led the market higher earlier this year, helped pull equities down during the recent sell-offs. FAANG stocks snapped their losing streak in last week’s market rally.
“You want to see if they can all demonstrate unified strength,” the UBS director of floor operations at the New York Stock Exchange said on “Squawk on the Street.”
During the November rout, FAANG stocks lost a combined $1 trillion in value, with Facebook, Apple and Amazon taking the bulk of the hit. The free fall led some, like Bleakley Advisory Group’s Peter Boockvar, to declare the FAANG trade “dead.”
“Each of these stocks, going forward, are going to trade on their own footing and not as a group,” Boockvar told CNBC. However, Cashin argued the group needs to emerge in leadership, pointing to the fact that there are not many other groups that can take up that mantle.
“If they don’t trade together again then we are going to have more volatility creep into the market,” he predicted.
He’s also looking for signals on the market’s direction in mid-January.
“There’s supposedly a lot of money out there,” Cashin said, noting that people are waiting to get past the first two weeks of the month to make sure there is no residual tax selling.
“I would pick somewhere around Jan. 15 and say let’s see if we get a second leg up here in the market,” he said.