Social Media ETF Trumps Twitter

ETF Trends

Twitter (TWTR), the newly public social media darling, certainly gets its fair share of press. Look at media coverage of Twitter this way: By market value, the company is roughly 10% larger than General Mills (GIS), but Twitter receives much more than 10% more media coverage than sleepy “Big G.”

The recent batch of news  pertaining to Twitter has not been all good. Analysts downgrades and the predictable concerns regarding the stock’s valuation have sent the shares tumbling 7.4% since the start of 2014. The Global X Social Media Index ETF (SOCL) , one of the first two ETFs to allow Twitter into its lineup, is going about its business. [Social Media ETF Allocates 4.5% to Twitter]

Twitter entered SOCL in mid-November with a weight of 4.5%, making the stock the ETF’s eleventh-largest holding. The ensuing rise in Twitter’s market value means it is now SOCL’s fifth-largest constituent with a weight of almost 5.7%, according to Global X data, but the ETF is hardly feeling a pinch as shares of Twitter tumble.

While shares of Twitter have plunged to start 2014, SOCL has surged 5%. The ETF is up almost 1.2% Wednesday and touched a new all-time earlier in the session. SOCL has earned those accolades following a 64% gain in 2013, which was good enough to rank the fund among the year’s best non-leveraged ETFs. [Rebound Could Await Social Media ETF]

Technical traders will be happy to know that SOCL is throwing off some positive signals. In late December, it was noted that SOCL was forming a bullish cup and handle pattern and that a breakout for the ETF could be afoot. The fund appears to have obliged and more upside could be on the way. [Social Media ETF Nears Breakout]

Social media “continues to show excellent relative strength” and SOCL “ranks near the top of all Exchange Traded Funds on the scans that I run and continues to work,” according to Captain John Charts, which points out that SOCL has made a triangle breakout with successful test and bounce.

Facebook (FB) and Sina (SINA), the Twitter of China, are driving SOCL higher. Those stocks are up 6.5% and 5.2%, respectively to start 2014 and that is noteworthy because they combine for over 20% of SOCL’s weight.

Global X Social Media Index ETF

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Tom Lydon’s clients own shares of Facebook.

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