The so-called FAANG stocks – Facebook Inc. (NasdaqGS: FB), Amazon.com Inc.(NasdaqGS: AMZN), Apple Inc. (NasdaqGS: AAPL), Netflix Inc. (NasdaqGS: NFLX), and Alphabet Inc. (NasdaqGS: GOOGL) – mean more to the market than most investors realize.

As long as they’re going higher as a group, the market’s going to follow their lead.

But, if they start to go in different directions from each other – or, worse if they start to slide together – the market’s headed for trouble, and possibly a sharp correction.

It seems strange that the status of only five stocks could be the determining factor of the health of the market, but here’s why the FAANG stocks are so crucial to the market’s performance and what you can do to make sure you never feel the adverse effects of it…

The “Great Gang”

There are a few good reasons why the FAANG stocks – plus Microsoft Corp. (NasdaqGS: MSFT) – attract so much attention and so much investor capital.

For starters, it’s about their revenues, their profits, their cash flows, and. in some cases, their massive cash hoards. It’s about their brands, and, in the case of the FAANG stocks, it’s about them being virtual monopolies. It’s about their subscribers, ecosystems, and products.

At the heart of it, these are growth stocks. They’re growing in every category listed above. Even Microsoft is back in growth mode.

They deserve to have a huge following regarding customers and investors. They’ve earned it. They’ve led markets higher – not quite singlehandedly, but close enough – for the last ten years.

In the process, they’ve become momentum stocks. Hedge funds, algorithmic trading programs, and even ETFs that invest in stocks with positive upside momentum (this just means they short stocks when momentum pushes them lower) chase them higher in a kind of positive feedback momentum feeding frenzy.

Then there’s the undeniable size of the “Great Gang,” as I call them. Their capitalization is huge. FB’s capitalization in more than $576 billion, AMZN’s is more than $837 billion, Apple’s is more than $929 billion, Netflix is the baby at $170 billion, GOOGL is more than $815 billion, and Microsoft weighs in at $774 billion. That’s a grand total of $4.1 trillion in capitalization.

Their huge capitalization, which is also their equity “value” makes them serious movers in the benchmark indexes like the Dow, Nasdaq, and S&P 500 that they’re part of.

Watch It Like A Hawk

Since 2013, when Facebook was added to the S&P 500, the weight of the FAANG stocks in the benchmark index has doubled to 11% of the index’s 500 most valuable stocks in America.

Then there’s the passive investing crowd. They’re increasing at breakneck speed, buying into index-tracking ETFs and mutual funds that are loaded with FAANG stocks and Microsoft. Why? Because that’s where the performance has been. And mutual fund managers and exchange-traded product sponsors want their products to deliver performance to attract more investors into them.

When you consider how this all works together to create a self-fulfilling, momentum-chasing force driving these stocks, you can see how important they are to the market.

As long as they’re going up, especially together in almost lockstep, the markets, the Dow, the Nasdaq, and the S&P 500 are going to keep going higher.

Besides creating a positive, optimistic outlook for stocks when they’re moving higher (as they’re bought up to be put into indexed products), all the other stocks in the indexes they’re in are bought, too, which lift the markets.

It doesn’t matter if the markets sell off, as long as the FAANG stocks and Microsoft aren’t selling off, as well. The market’s going to hiccup now and then, but if the “tech darlings” hold up, they’ll lead the markets back and take them higher as they go.

But beware, the opposite is also true. If the darlings start to sell off, as they did in February, look out below!

An early warning light will go off if the Great Gang starts to diverge. If some are faltering while others are holding up, it may just be a matter of time before investors take precautionary profits in the holdouts before they turn down – which, of course, will cause them to ultimately turn down.

And that could start a negative feedback loop hitting the FAANG stocks, as investors with ten years of profits take some off the table, index managers sell them, and the rest of the stocks in the indexes fall along with them.

That’s how important the FAANG stocks and Microsoft are now to the entire market.

If you’ve been looking for that elusive magic leading indicator of market movement, now you know it exists.

And knowing that just one cluster of five (six if you count Microsoft) stocks could make or break the market is a bit scary to imagine.

There’s no certainty with energy stocks, pharmaceutical stocks, even our tech darlings. The only thing that’s certain with the stock market is its inconsistency.