It seems only a couple of weeks ago, perhaps less, that I told you how much I liked Amazon (AMZN) . I still do. I also sold half of my long position just after the open on Friday. Why would I do such a thing? Simple. Discipline. My panic point for Amazon was $1800. The stock closed with that price in view on Thursday evening, then opened below that spot early on Friday. After giving the stock a chance to retake the level, I figured that I better get myself out of Dodge City, before Marshall Dillon chased me out. Took a few hours, but by day's end I was grateful to have reduced the exposure.
One, Two, Three Inning
Somewhere in between the hours that elapse between the time that the closing bells ring at 11 Wall Street and uptown at Times Square, and the crowds file into the sports bars around town, news broke. It seems that the U.S. Department of Justice was preparing to launch an antitrust probe into the Google unit of Alphabet (GOOGL) . Investors must understand a few things here. The Federal Trade Commission and the DOJ share responsibility for antitrust enforcement in this country, and the DOJ had won jurisdiction from the FTC recently for this kind of investigation.
Immediately what came to mind is just what this might mean for the rest of big tech, or at least for the internet side of big tech where it interfaces with the public? In other words, FANG. Then on Sunday the Washington Post reported that Amazon could possibly come under the scrutiny of the FTC, and that dividing responsibility for these two behemoths between these two agencies was the result of a new agreement that the agencies had come to.
As for Facebook (FB) , that firm just saw their bid to keep the ongoing privacy case from reaching the European Court of Justice blocked by the Irish Supreme Court. Kind of reminds me of that day (July 10, 1984) that a 19 year old Dwight Gooden entered the All-Star game in San Francisco in the fifth inning and struck out Lance Parrish, Chet Lemon, and Alvin Davis in order.
Is there a... or are there legit cases here? Honestly, how would I know? How would the average investor just trying to survive in an already tough environment know? What we do know is that Google dominates the internet search industry, and it's Android operating system dominates the world of mobile devices., The firm has already come under intense scrutiny in Europe and been fined multiple times. We know that Facebook has been hauled before Congress on user privacy concerns, and been forced to answer uncomfortable questions about past behaviors. Facebook's social media platforms now boast more than 2 billion active accounts. We know that Amazon now handles almost half of all e-commerce and reinforces this dominance through the more than 100 million strong Prime Membership program.
All of this dominance across these fields had led to also dominant positioning in the fast growing world of digital advertising. This may be the key right here. Many competitors, feeling disadvantaged in one way or another have made complaints known. Many users have wondered about how their own information might be used. This has led these companies into a bazaar position in the eyes of the public. While all three are beloved for the convenience and the services they provide, they have also become unpopular as a group. This has made them potential political targets. It's not all that often that Sen. Warren of Massachusetts and President Trump sound like they are on the same side of any issue. Yet, that is where we are. The FANG names do not have loud voices speaking in their defense in the nation's capital.
As An Investor
As an investor, fortunately, I abandoned Alphabet when the firm had been criticized by Marine Corps General Joseph Dunford as not being so helpful to the U.S. Department of Defense. The president and the firm have since appeared to somewhat patch things up but I never came back. The firm is a great company, with a lot of expertise in growing fields such as artificial intelligence and autonomous vehicles (WAYMO), as well as video streaming. That said, search remains where the bread is buttered. The stock has been bottoming just below $1k since late 2017. That's a lot of dough to tie up for nothing.
I have never held an equity position in Facebook, as I have always felt the firm was indeed managed quite poorly. I have played earnings related events through the options market and would expect to do so in the future. The stock is now trading close to where resistance had been met in the early part of the year. Support could materialize here. If not, you'll have to look to the 200 day SMA (161).
Amazon, in my opinion, is the cream of this crop, and while I remain long a reduced long position in the stock, is the only name here that I look to buy back the portion already sold.
The curve ball here is whether or not these firms will at some point be forced to break-up. If and when that becomes the case, then even as it might be seen as punishment by some, or by the firm's themselves, such an occurrence would likely leave all three stocks grossly undervalued. Funny how that works. For Amazon, retaking the 40 week moving average of $1731 now becomes key to short term stability.
Investors will probably have to wait, but the worm will turn, and when a bullish looking pattern emerges, there will be opportunity. Until then, a cease-fire might be prudent. As for day traders. there will be plenty of opportunity each and every day... to gamble on the whims of the intraday MACD... and it will be gambling.