Tech stocks have shown strong performances this year, buoyed largely by the generalized support that has been seen in equity markets. But what many investors have missed in the process is the strong surges we have seen in sentiment as directed at social media outlets, which have posted massive rallies during this period. The two standout names here would have to include FaceBook and Twitter, which should not be much of a surprise given the fact that social media arguably holds the current commanding role in the tech space.
But which company is performing best in terms of investor sentiment? Strong analysis of the market price activity in each of these names can actually give the best indication of broader sentiment, and with the recent moves seen in FaceBook in particular, it is a good idea for investors to get a sense of what is happening in the market in order to make assessments for what is likely to happen next. According to reports released byMediaGroup London, the market’s reaction to recent moves by FaceBook and Twitter have been expressed in terms of real prices, with major moves seen in the early parts of this year. Next, we look at some of these these changes in market perspective of social media outlets, using FaceBook, Inc. (NASDAQ: FB) and Twitter, Inc. (NYSE: TWTR).
Twitter (NYSE: TWTR)
Critical Resistance: 47.50
Critical Support: 42.60
Market Bias: Moderately Bullish
(Chart Source: CornerTrader)
Twitter / TWTR Stock Trading Strategy: Prices are struggling as they start to trade near their yearly highs. Momentum is still positive, however, so expect a drop back toward $43 before the next rally.
“Over the last year,” said Vlad Karpel, options strategist at TradeSpoon, “Twitter has experienced some major fluctuations in its market valuation, hitting highs near $70 before dropping more than 50% to the lows seen in May.” Since then, we have seen a major recovery, as the social media space as a whole starts to recover in the eyes of Wall Street. Undeniably, we are in the midst of a major bullish trend in TWTR, but the real question is whether or not there is sufficient momentum left in the market to allow prices to rise to new highs. And when we look at the recent activity in FaceBook, we can start to see how the social media as a space as a whole seems to be experiencing the same types of trends.
FaceBook (NASDAQ: FB)
Critical Resistance: 77
Critical Support: 71.80
Market Bias: Sideways to Bullish
(Chart Source: CornerTrader)
FaceBook / FB Stock Trading Strategy: Prices have become over-extended after the major rallies seen at the beginning of this year. Wait for a move back toward the stock’s historical moving averages before making any bullish projections in FaceBook.
After it surge in valuations at the beginning part of this year, the stock price in FB have turned sideways near the $75 mark. In price analysis, this type of activity is viewed as a consolidation period before a major breakout is likely to occur, but this type of activity can also be viewed as a major slowdown in momentum that indicates market sentiment is starting to turn.
This is significant because valuations at FaceBook are now much higher than they were at the beginning of the year, and this opens the door for downside corrections if investors start to lose patience with the lack of movement in the stock price. Looking at support and resistance levels (areas of historical supply and demand), we can see that price tendencies tend to reach an extreme near the $77 area. In short, this means that the outlook is still positive -- but maybe not as rosy as it was at the beginning of this year. When compared to Twitter, these outlooks show slowing trends for the industry as a whole so it is entirely possible that we have already seen market’s express their positive sentiment in this space, and this could make continued gains difficult for the final month’s of the year.
