Social media: a sector ready to “Like”?

socl

The Global social media ETF contains such well-known names as Facebook, LinkedIn, Twitter, Yelp, and Google. When I tore the SOCL index ETF apart and looked at the individual charts of its stock holdings, none of the holdings looked bullish at this point. That makes sense, given the giant symmetrical triangle we’re witnessing on the index ETF.

As noted on my last blog,  you will want to put securities that are consolidating in triangles, such as this one on your watch list. An upside breakout through $20 would be bullish for the SOCL ETF. A downside breakout through about $18.50 would be bearish.

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Working against the ETF chart’s chance of breaking to the upside is Facebook, which looks to be rounding over. Twitter (not shown)  and LinkedIn are struggling, but appear to be finding some level of support at this time. As is Google (not shown).

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My thoughts, when examining the index ETF shown here, is to wait for a breakout on either side of the triangle.  Watch my price points noted above. Such a breakout would be a result of the components, on the whole, moving from their stagnation points at this time. Thus, it’s probably best to avoid the individual stocks in the sector until the ETF shows us which way things are going to move.

 Free Technical Analysis Seminar in Markham with Keith Richards

Markham Village Library: 6031 Hwy. 7 East, Markham, Ontario,   L3P 3A7 – Wednesday, November 26, 2014, 7:00 PM

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2 Comments

  • Keith,

    If SOCL does break to the upside, wouldn’t it be better to buy PNQI (or even FDN) instead of SOCL … as they usually outperform SOCL?

    Reply
    • Those are good suggestions, thanks for that – these ETF’s seem to have charts a little similar to Twitter, LinkedIn, Google–less of a triangle, more of a consolidation after a drop. Either way, wait for a move up before going long. Premature to make a directional call on these.

      Reply

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