Tech stocks have been the ones to watch this week, after Goldman Sachs sounded a note of caution on the outperformers last Friday — sending the sector into a tailspin, and producing this rare Nasdaq-100 Index (NDX) signal. Yet, even with the recent sell-off, internet stocks still hold a commanding lead on the year, as evidenced by First Trust Dow Jones Internet Index Fund (FDN), which is up 19% year-to-date at $94.97, and within a chip-shot of last Friday’s record high of $98.08.
What’s more, of the 32 stocks we follow under the “internet” umbrella, 72% are still trading north of their 80-day moving average, with an average year-to-date return of 24.2%. Nevertheless, the number of analyst “buy” ratings has decreased slightly over the past year, and it would take almost four sessions to collectively cover short interest on the group. This leaves ample room for upgrades and/or short covering to translate into tailwinds for the sector.
AMZN, TWTR Stocks Trading Above Key Technical Levels
Two stocks of notable interest are e-commerce concern Amazon.com, Inc. (NASDAQ:AMZN) and microblogging name Twitter Inc (NYSE:TWTR), both of which appear to be presenting prime options-trading opportunities at the moment. AMZN, for instance, has put in a tremendous showing on the charts, up 31.3% year-to-date. The shares hit a record high of $1,016.50 on Tuesday, June 6, before pulling back to and bouncing from their 50-day moving average. AMZN stock was last seen trading at $984.24.
TWTR, meanwhile, recently pulled back to the $16.30 region, home to several layers of potential support. Specifically, this level coincides with Twitter stock’s year-to-date breakeven mark, its 80-day moving average, and a 61.8% Fibonacci retracement of its April-to-May surge. The shares bounced sharply from here, and were last seen trading at $16.77.
Those wanting to bet on the internet stocks’ near-term trajectories are able to find a relatively affordable deal with options. While Amazon stock’s Schaeffer’s Volatility Index (SVI) of 21% ranks in the 27th annual percentile, TWTR’s SVI of 35% is docked below 91% of comparable readings taken in the past year. In other words, low volatility expectations are being priced into the stocks’ short-term options — a potential boon to premium buyers.
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