Negative News Dings Facebook, Apple Stocks Again

Both AAPL and FB have pulled back sharply in recent months

by Patrick Martin

Published on Nov 23, 2018 at 10:01 AM

The broader stock market has resumed its sharp sell-off today, led by the spiraling tech sector. More specifically, FAANG stocks are significantly lower today, with Facebook, Inc. (NASDAQ:FB) and Apple Inc. (NASDAQ:AAPL) under pressure amid some negative headlines.

Facebook Under More Public Pressure From Soros

For Facebook, the social media giant admitted to hiring an opposition research firm to investigate billionaire George Soros, who was critical of the company's business model. As such, the head of Soros' Open Society Foundation, Patrick Gaspard, has called for oversight of Facebook by lawmakers. At last check FB was down 0.7% to trade at $133.90 this morning. This is shaping up to be the stock's third straight weekly loss of 3% or more. Longer term, the equity has given back 24% in 2018 amid a litany of public scrutiny

In the options pits, put buying has been gaining in popularity. FB's 10-day put/call volume ratio of 0.69 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 84th percentile of its annual range, indicating that speculators have shown a much healthier-than-usual appetite for bearish bets during the past two weeks.

Facebook has been a strong target for premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 81. This shows a tendency for the stock to make bigger-than-expected moves over the past year relative to options traders' expectations.

AAPL Starting To Churn Below Key Trendline

Looking at Apple, a Wall Street Journal report indicated the company was cutting the prices of its iPhone XR in Japan (subscription required). At last check, AAPL was down 0.4% to trade at $176.16, and has now shed 25% since its Oct. 3 record high of $233.47. On Tuesday, Apple shares breached their 320-day moving average for the first time since November 2016. Nevertheless, the equity remains above its year-to-date breakeven level.

The stock's recent struggles could be exacerbated by a shift in sentiment in the analyst community. Of the 28 brokerages covering AAPL, 14 rate it a "buy," and the other 14 rate it a tepid "hold," leaving the door open for downgrades.

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