After Trump discussed his distaste for social media last week, the White House considered drafting an executive order that would open probes into Google (NASDAQ: GOOG), Facebook (NASDAQ: FB), and a few other companies to investigate antitrust violationsand online platform bias – something that Trump has specifically felt targeted by (with good reason).
In the executive order, which has not yet been enforced, law enforcement agencies and federal antitrust investigators are instructed to “thoroughly investigate whether any online platform has acted in violation of the antitrust laws,” with the intent to “protect competition among online platforms and address platform bias.”
While the order itself doesn’t name any companies, it does represent a step towards retribution for the scorned Trump-administration – something that many experts thought would never actually happen. Trump himself has publicly criticized several companies for suppressing conservative voices online, and after the recent Google leak that showed a clear anti-conservative shift in Google search results, he has every right to follow this thread to the bitter end.
In August, President Trump remarked on Twitter, “Social Media is totally discriminating against Republican/Conservative voices speaking loudly and clearly for the Trump Administration, we won’t let that happen. They are closing down the opinions of many people on the RIGHT, while at the same time doing nothing to others.”
Facebook and Google have said in the past that they do not intentionally silence any political figures or beliefs, but accidents do happen when they try to eliminate online harassment, often resulting in the removal of one side of an argument.
This may be true, but after everything that has surfaced over the last few months, it’s become quite obvious that one side (the Left) is getting favored much more than the rest, and President Trump is ready to take these social media platforms to task, just like he has done with China.
This is all exciting stuff, and something to track as Trump continues to pressure these companies, but what I really want to focus on is the effect any investigation could have on the stock prices of these social media giants.
Specifically, I want to talk about the king of search, Alphabet Inc., AKA Google:
In the daily candlestick chart above, you can see that Alphabet Inc. has been straddling what I call the corridor of mediocrity since February. Until July, when GOOG finally broke through, it was using this yellow bar as a level of resistance that it kept bouncing off of.
Like I said, a breakthrough occurred in July, and now it looks like share prices of Alphabet Inc. have been sucked back down into the corridor, this time using it as a level of support. Due to a number of factors (like exhausting the goodwill of conservative investors), GOOG has dropped since mid-July and could continue its plunge on the news of a Trump antitrust investigation when the market opens today.
Despite a pending investigation, however, Google will still have a stranglehold on web search, and it’s not going anywhere soon – even if it is found in violation of antitrust laws. Because of that, I could see the following situation play out:
In this chart, each yellow line below the corridor of mediocrityrepresents a different level of support that GOOG could hit before going on a run back to the top. If a Trump antitrust investigation does actually happen, it wouldn’t surprise me to see investors dump shares of Alphabet Inc. in search of greener pastures. This would likely cause a major drop down to one of the three support levels identified in the chart above, before rising back up like a phoenix from the liberally biased ashes.
On the other hand, this whole thing could blow over as Trump turns his attention back to China, public enemy number one. In that case, GOOG could escape the corridor of mediocrity (which has now become a level of support) unscathed, heading to a new all-time high as the company has managed to shrug-off the President of the United States unabated.
Whatever scenario does play out, chances are that you don’t have a plan in place to take advantage of the tremendous opportunity that a stock like GOOG presents. This is something that our current members get any time big “home-run” trades show up on our radar, and I’d be absolutely sick about it if you missed another chance for hand-over-fist profits.
So please, do me a favor, and watch what happens with Alphabet Inc. shares over the next week, because I think you’ll find that I’ve not just predicted what is going to happen, but I even showed you what price level Google will make a resurgence at.
