Time to start “following” Twitter (TWTR)? Not so much. (December 08, 2014)
I want to look at the social media index, Global X Social Media Index ETF ( NASDAQ:SOCL ), here. This is leaning on support here from October and it’s got some pretty significant downside momentum.
This is easy; it’s pretty unambiguous. My suggestion is stay away from these social media stocks right now. Think about this, this is obviously not where money is going, and right now in December, money is going into those stocks and into those sectors that have been strong throughout the year. Why is that? That’s because money managers are chasing performance, they’re always casing performance.
Think about it, if the market was down really big there would still be money managers chasing performance, it’s really tough to beat the S&P. Those of you that have tried to do it let me know when you do that for five years in a row. Money is not flowing in to these stocks; you shouldn’t be either.
Look at Twitter ( NYSE:TWTR ), it was in a volatility squeeze, right around $40.00 the stock was squeezing, now it’s moving to the downside. Tweet this, my bet is, you’re going to get a test of $30.00, don’t believe me? Go ahead and buy it and see what happens, just see what happens; this is not where you want to be.
Facebook ( NASDAQ:FB ), I’m not saying it’s going to move higher, I’m saying that it’s in a tight squeeze right now. This is a stock that you’re not really making money on right now; it’s just trading in a really tight range, 77.50, 73.50, like a 4 point range, that’s just not going to work for you.
So you want to wait for this, watch this; if it starts moving up towards $80.00 then you go ahead and buy it, but just know that you’re swimming against the current. You’ve got these other stocks that are not looking good, so my point on this video is, you just want to stay away from social media right now.
Now, I know the whole deal, you’ve got to buy them when they look horrible, you’ve got to buy them when they look like crap. Okay, this doesn’t look like crap, I hope it’s okay if I say that, this doesn’t look like crap it looks like it’s going to look like crap, and that’s a really key distinction. I think some of you may not be understanding that; you’re looking at this and you want to buy this stock because it’s down so much, no it’s not, it’s just testing this level here.
“Down so much” is at $16.00, that’s when you look and say, “Well maybe now I’ll buy this stock because it’s down here in the penalty box down here; and so, how much lower can it go before a bounce?” That’s not where we are here, this is still a sector, an ETF that’s in search of a bottom; I would let it find it by itself, you don’t need to help it out.
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