Trade of the Day: Facebook, Inc. (FB)

We see strong potential for a bullish continuation through the end of the month

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Today, we’re opening a new bullish trade on Facebook, Inc. (NASDAQ:FB). There have been some concerns that ad-spending growth rates would slow over the last few months as big advertisers grew concerned about privacy issues and reliable data from FB and Alphabet (NASDAQ:GOOGL). However, recent industry analysis is showing that local advertisers are more than making up for the very small decline in large advertiser growth rates.

Facebook is one of the primary beneficiaries of that spending, which should make the company an attractive, large-cap, technology investment for traders who are otherwise concerned about semi-conductor or other trade-sensitive stocks in the sector. FB isn’t likely to completely avoid a broader selloff if one occurs, but relative strength indicates that FB is surprisingly defensive in the current market environment.

According to The Interpublic Group (IPG), online advertising is likely to grow 6.4% this year rather than the earlier estimate of 5.2%. This news, lower interest rates and a surprisingly defensive market have continued to push FB above short-term resistance near $195 per share. From a technical perspective, this momentum indicates strong potential for a bullish continuation through the end of the month.

‘Buy to open’ the FB July 20th $202.50 Call (FB180720C00202500) for a maximum price of $3.55.

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