Forget FANG. 2016's Gains Will Come From BARF...

No more FANGs. It’s time to BARF…

We’ve talked at length about the market’s change in character so far this year. And if you haven’t noticed the massive shifts taking place you haven’t paid close enough attention…

Today you’re going to see exactly how to position your trading portfolio so that you can take advantage of the market’s seismic shift. The ground is already rumbling under your feet—so the time to act is now.

Exhibit A for the market’s collective shift: FANG. For the uninitiated, that’s Facebook, Amazon, Netflix and Google (ahem, I mean Alphabet). We successfully traded every single one of these stocks last year. If you wanted to generate double-and triple-digit returns, you had to hitch your star to at least one of these FANGs in 2015. “Buy strength” was the stock market’s motto. Everything else was garbage.

Not so in 2016. Sure – FANG’s bookends (Facebook and Google) have managed to hold on tight near their highs. But Netflix and Amazon are tanking. Both of these stocks are sitting at year-to-date lows this morning. The market’s been deFANGed. And the bulls want ‘em back.

Not to worry. We have a new group of market-driving stocks waiting in the wings. Enter BARF, the perfectly-named acronym for all your 2016 trading needs…

“We at Extract Capital wanted to create a meaningless acronym ourselves, ‘BARF,’” explains creator Darin Milmeister. “These are huge, or relatively huge, well…. they were huge mining houses. BHP Billiton, Anglo American, Rio Tinto, and Freeport-McMoRan. The four stocks declined an average of 51% and lost $101 billion in equity value in 2015. The four companies generated a combined $130 billion in revenue over the last 12 months. Year-to-date for 2016, these stocks have dropped another 22.9% on average through January 20.”

These BARF stocks would have made anyone want to hurl in 2015. The FANGs gained 82% on average last year while the BARFs lost 51%.

But like I said, the market’s different now…

Check the charts and you’ll see that these vomitous names could be bottoming out. Just look at Freeport-McMoRan over the past 10 trading days compared to the S&P 500:

The Comeback Trail

BARF has the potential to become a powerful trading theme over the next few weeks as more evidence piles up in these orphaned stocks’ favor. The U.S. Dollar Index took a huge hit yesterday as precious and base metals scampered higher. Gold futures are now at levels not seen since late October, and even Dr. Copper—the disgraced professor of world economic health—is jumping to 2016 highs.

Mining stocks have been dead money walking for years now. Perhaps this run of horrifically bad performance is about to come to an end—at least temporarily. Just look at the Market Vectors Gold Miners ETF. After idling around breakdown levels for more than six months, this rickety ship has reversed course and is sailing hard in the opposite direction.


Market Vectors Gold miners

Want to make money this year? Two things – avoid FANGs – and get ready to BARF.

It couldn’t be simpler…

Greg Guenthner
for The Daily Reckoning

P.S. Profit from the seismic market shift–sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.

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