How to Trade Facebook and Twitter as They Tangle With Politics

Twitter, Facebook and other platforms make headlines with the handling of President Trump's accounts. Let's look at the stocks on the dip.
Author:
Publish date:

Social media stocks were taking a hit Monday, with Facebook  (FB) - Get Report and Twitter  (TWTR) - Get Report prominently in the spotlight.

Following last week’s events at the Capitol Building in Washington,  Twitter and Facebook made the decision to suspend President Donald Trump’s accounts. 

Others have joined the move too, with companies also taking to Parler and effectively knocking that offline as well.

As one would expect, these decisions have created controversy and investors are seeing the stocks pay the price on Monday.

Facebook is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB? Learn more now.

Trading Facebook

Daily chart of Facebook stock.

Daily chart of Facebook stock.

Down about 3% so far on the day, Facebook is taking less of a beating than Twitter. However, hitting its lowest level since Oct. 7 doesn’t exactly have bulls excited.

Unfortunately, the stock is in a bit of no man’s land here. Now bulls must wait for the stock to either reclaim key support or dip further.

If it’s the latter, let’s keep an eye on this $245 to $250 area. There it has the breakout level from July and the 200-week moving average. It also comes into play near the September low.

Below could put the $225 area on the table, which was the pre-coronavirus high coming into March. This level also turned into support once Facebook broke out over it in May.

It's also worth mentioning that the 10-month moving average comes into play near $252.50.

On the upside, a rally could take the stock to the $270 to $275 area, where it finds the 50-day, 100-day and 10-week moving averages. Above opens the door to a powerful rally. Otherwise, these measures could act as resistance.

Trading Twitter

Daily chart of Twitter stock.

Daily chart of Twitter stock.

Twitter came into the day on a four-day losing streak and down in seven of the past eight sessions.

Shares opened lower by more than 8% and fell 12.3% at the low. Currently, shares were down “just” 5% in midday trading, while Twitter tussles with its 50-day moving average.

However, we’re seeing the stock’s second sharp reaction off the 100-day moving average in three months.

Should it lose this level, it could put $40 in play, as well as the 200-day moving average.

If Twitter can reclaim the 50-day moving average, then it it puts a gap-fill in play up toward the $50.20 to $51.50 area. It also puts the 10-week moving average on the table near $50.