Thursday was a good day for the market. But if you want to see something more sustainable than flimsy headline relief, look to the price charts of social media stocks Facebook (NASDAQ:), Twitter (NYSE:) and Snap (NYSE:) and put shares of each on the radar for purchase. Let me explain.
Breaking news of China being slightly less aggressive with its tariff retaliation strategy saw the S&P 500 gain 1.28% in the second to last trading day of August. Still, it has been a tough month for index bean counters and to varying degrees, for investors in FB stock, TWTR and SNAP.
A continuing trade war and widening inverted-yield curve have made risk assets a bit riskier with Wall Street. Those concerns have been drivers in the broad-based market barometer underwater for all of August with just one day remaining. The good news for buyers is that’s not the entire story for the market or when considering Facebook, Twitter and Snap as stocks to buy.
An arm’s length away from today’s volatile macro headlines, the broader market signaled on Aug. 13. Historically, most every significant market rally has begun with this type of bottoming action. It’s important to say the least and certainly something to take more seriously than the day-to-day unpredictable headlines.
With the market winds at investors’ backs, even though it may not feel like it at times, it’s the type of environment where locating stocks to buy makes sense. And with leading social media plays FB stock, TWTR and SNAP also displaying solid technical leadership over this period, the decision is that much more serviceable.
Stocks to Buy: Facebook (FB)
Facebook is the first of our social media stocks to buy. Unlike the broader market, shares failed to score a new all-time-high in July, but don’t let that weakness fool you. Over the past month the weekly price chart of FB stock has put together a very constructive and orderly pullback that’s challenging channel support and the 38% retracement level.
As Wall Street says goodbye to the month of August and with shares just now generating a bullish oversold crossover from its stochastics indicator, there are some good reasons why FB is one of our social media stocks to buy.
I’d recommend confirming a low is in place and purchase FB stock above last week’s engulfing candlestick. From there, the trend should find shares making new relative or even fresh all-time-highs before technical support is challenged again.
Twitter is the first of our social media stocks to buy. Just like people, price charts have been known to change. It’s no surprise of course that the two are intertwined. And in the case of TWTR stock, the transformation from a bearish head-and-shoulders pattern into a classically shaped and bullish cup-with-handle base is one that’s set to produce sizable returns for investors.
My recommendation in TWTR stock is to buy shares on a breakout of the handle above $43.48. That should set shares up for a quick test of the cup’s 2018 high. From there, it may not be to the moon for investors, but a trend back toward Twitter’s 2013 all-time-highs near $75 could certainly be in the works.
Snap Inc (SNAP)
Snap is the last of our social media stocks to buy. A relative newcomer to the market, this social media stock has been proving naysayers wrong on the price chart throughout 2019 — SNAP stock is up roughly 165% on the year. Now those gloomy Guses are pointing at Instagram’s development of a companion messenger app called Don’t believe them for a second.
The price chart continues to reaffirm the narrative SNAP stock investors are on the right side trade and in position to capture more profits from a steady uptrend that has been established. After five weeks of consolidating, SNAP stock could be ready to form its latest higher low within the up-channel.
As of Friday, this stock to buy has formed a weekly doji low. A rally next week through the high of the candlestick would confirm a pivot low and overall offers a decent spot to pick up shares on weakness. Having said that, with SNAP stock’s stochastics nearly oversold, but also still pointed down and trend support at much lower prices, I’d be sure to keep a stop-loss tied to the doji rather than hope.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter and StockTwits.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.