Facebook And Amazon’s Antitrust Issues: Effect On Stock Price?

Could antitrust issues affect the stock price of the big name tech outfits? Of course. The question is: if and when?

If they were to be broken up, everything changes for Facebook and Amazon AMZN . The 2 internet monsters with the straight up price charts are among the subjects now of Congressional hearings into their largeness. Would it be better for the world if many companies competed for the huge share of customers now claimed?

With Democrats more likely to be in charge of all 3 branches of government, it becomes more likely that tech stock CEO’s may find more challenging conditions. So, the closer we get to November, the more likely it becomes that investors wake up to the new environment for this sector.

It’s not just that, though.

Seasonality for stocks tends to take a dip in August and again in mid-September through October, as market technician Dave Stendahl notes. Does anyone here remember October, 1987? Leaders like Amazon and Facebook may be primed for dipping given that antitrust thinking may be jelling and that seasonality begins to weaken in general soon.

Nothing is guaranteed — all of this amounts to just thinking out loud. What do the price charts say?

Facebook’s daily looks like this:

That red dotted line connecting the mid-March lows with the late June dip is the line to watch. A day or 2 of selling that causes the price to drop below that line would represent a problem: the end of quite an up trend.

Note that the relative strength indicator (RSI) at the top is now diverging from price. That is, as price continues upward, relative strength now heads downward. It’s the same basic thing with the moving average convergence/divergence indicator (MACD) you can see below the price chart.

Amazon’s daily looks like this:

There is something a little amazing about that red dotted line that connects the March low with the July dip. Every time the price has dipped downward from May through all of June, buyers have stepped up right at the up trend line and purchased enough to keep it going. Similar to the Facebook chart above, a couple of closing prices below that line might indicate less promise for Amazon, however temporarily.

The NASDAQ-100 NDAQ daily price chart looks like this:

All of the 100 big tech names taken together and it shows the heavy influence of the 2 big leaders, Amazon and Facebook. That is a solid up trend from the March low to the recent dip. The index is coming to a crossroads, in a sense, will it take out the downtrend line connecting the July peaks — or break down below that months-long up trend line?

It looks as if the prices are taking a pause as investors consider all of the forces coming together at this point: the elections, Covid-19, seasonality and whatever else is generally unseen now but lurking in the background of all that.

I do not hold positions in these investments. No recommendations are made one way or the other.  If you're an investor, you'd want to look much deeper into each of these situations. You can lose money trading or investing in stocks and other instruments. Always do your own independent research, due diligence and seek professional advice from a licensed investment advisor.