U.S. equities are recovering on Tuesday as President Donald Trump makes overtures to both Iran and China in an apparent effort to relieve tensions with both nations. He pleaded with Iran’s president to “call me” as the U.S. Navy continues to conduct drills in the Persian Gulf. And Trump temporarily eased restrictions against Chinese tech giant Huawei.
As a result, the Dow Jones Industrial Average and the S&P 500 are attempting to crawl back up and over their 50-day moving averages. The Russell 2000 small-cap index, however, remains mired in the middle of a trading range going back to October, floundering below both its 50-day and 200-day moving averages.
Big technology stocks are also under pressure, with a number of famous names in holding patterns near critical support levels. The reappearance of market weakness would result in major breakdowns, resulting in swift losses.
Here are four stocks to avoid:
Tech Stocks Looking Vulnerable: Facebook (FB)
Everyone has a love-hate relationship with Facebook (NASDAQ:FB). People are still hooked on the dopamine hit they get from social media. But this tech stock is facing a growing backlash against the company’s privacy practices and the mental health implications of seeking all those likes and favorites. The company’s shares are holding near their 50-day moving average, threatening a breakdown that would see a test of the 200-day moving average worth a loss of nearly 15% from here.
The company is scheduled to next report results on July 24 after the close. Analysts are looking for earnings of $1.84 per share on revenues of $16.5 billion. When the company last reported on April 24, earnings of $1.89 beat estimates by 27 cents per share on a 26% rise in revenues.
The bulls are fighting tooth and nail to keep Amazon (NASADQ:AMZN), one of the two most important stocks in the world, from breaking below its 50-day moving average. It has been trench warfare, with every intraday dip of that threshold vigorously fought for over the past two weeks. A breakdown looks likely here, which would not only put the 200-day average under threat but would likely result in a return to the early March lows, a near 15% loss from here.
The company is scheduled to next report results on July 25 after the close. Analysts are looking for earnings of $5.49 per share on revenuers of $62.5 billion. When the company last reported on April 25, earnings of $7.09 beat estimates by $2.37 per share on a 17% rise in revenues.
Netflix (NASDAQ:NFLX) shares look even weaker, already trading below their 50-day moving average and desperate to hang onto their 200-day moving average as shareholders endure a trading range gong back more than a year. A breakdown here would set up a test of support near the $300-a-share level, which would be worth a loss of 14% from here.
The company is scheduled to next report results on or around July 15 after the close. Analysts are looking for earnings of 56 cents per share on revenues of $4.9 billion. When the company last reported on April 16, earnings of 63 cents per share beat estimates by six cents on a 22.2% rise in revenues.
Shares of eBay (NASDAQ:EBAY) are threatening to break down and below a four-month trading range as they continue to flounder near the 50% retracement level of the 45% decline suffered from the early 2018 highs to the lows set in December. Watch for a move down to the 200-day moving average, which would be worth a loss of more than 10% from here.
The company will next report results on July 17 after the close. Analysts are looking for earnings of 62 cents per share on revenues of $2.7 billion. When the company last reported on April 23, earnings of 67 cents per share beat estimates by four cents on a 2.4% rise in revenues.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
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