The ETF to Watch Amid Social Media Earnings Onslaught

FB, SNAP, and TWTR are all set to announce their latest quarterly results this week

Apr 23, 2019 at 7:01 AM
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Earnings season is officially underway, and while bank and healthcare stocks have dominated Wall Street's attention lately, social media stocks could soon have their "moment in the sun." With Facebook (FB), Twitter (TWTR), and Snap (SNAP) set to report earnings this coming week, we decided to crunch the numbers on the Global X Social Media ETF (NASDAQ:SOCL), which has ascended into a congested matrix of notable levels.

First, a little background on SOCL. The exchange-traded fund (ETF) debuted in late 2011, even before TWTR and SNAP went public in 2013 and 2017, respectively. SOCL now boasts Facebook and Twitter as its second and third top holdings, with Snap also in the portfolio.

That said, it shouldn't be much of a "eureka moment" to see some of SOCL's biggest weeks came in the face of titanic post-earnings swings from the aforementioned trio of social media stocks. Most notably, SOCL's best week of the past two years came in February 2018, when the fund rallied 7.5%. Around that same time frame, both SNAP and TWTR enjoyed one-day earnings reactions of 47.6% and 12.2%, respectively, on Feb. 7 and 8. In that same vein, SOCL's second-best week ended Nov. 2, 2018, with the ETF racking up a gain of 6.9% just days after TWTR and FB enjoyed one-day, post-earnings upticks of 15.5% and 3.8%, respectively.

But as SOCL "lives by the sword," it also dies by the sword, in the sense that some of the ETF's worst weeks have come on the heels of surprisingly feeble earnings showings from the social media sector. That includes a one-week drop of 5.7% for SOCL in late July 2018, when TWTR sank more than 20% in a single day after earnings.

It is therefore relatively fair to assume that SOCL could be in for another potentially monumental week, depending on the collective Wall Street reception of social media earnings. With that in mind, we've rounded up some of the major trendlines and price points in play for the ETF in the short term. Traders should watch the shares' progress around these regions for breakouts and/or rejections at overhead levels, and catches and/or breaks of support below.

  • $35.43 represents three times SOCL's November 2012 all-time low of $11.81, and is around where the shares landed after a July bear gap.
  • $33.60 represents a 61.8% Fibonacci retracement of SOCL's plunge from its June 2018 closing high of $38.00 to its Dec. 24 closing low of $26.60. This area also stifled rally attempts in the third quarter of 2018.
  • $33.06 represents a 20% year-to-date gain.
  • $32.50 contained SOCL's pullback in April-May 2018.
  • $32.30 represents a 50% Fibonacci retracement of the June-to-December sell-off.
  • $32.24 is two times SOCL's May 2014 low of $16.12.
  • $31.95 is home to the fund's ascending 50-day moving average, which has acted as support for most of 2019, and recently made a golden cross with its 200-day counterpart -- often seen as a precursor to more upside.
  • $31.53 represents a 20% gain from the ETF's December 2018 low of $26.28.
  • $31.23 is home to SOCL's 200-day moving average.
  • $31.00 represents a 38.2% Fibonacci retracement of the June high/December low.
  • $30.31 marks a 10% year-to-date gain.
  • $27.55 is SOCL's year-to-date breakeven marker.

SOCL for CotW April 18

Subscribers to Bernie Schaeffer's Chart of the Week received this commentary on Sunday, April 21.



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