Tech has been on a tear this year, and closely watched chart analyst Carter Worth is eyeing one name for an even bigger breakout: Facebook.
Facebook along with Apple, Alphabet, Microsoft and Amazon are the top five stocks in the S&P 500 by market cap. Despite the Nasdaq 100 ETF, QQQ, hitting record highs on Friday, those five mega-cap tech stocks have been “badly underperforming [the S&P 500] all summer and all autumn,” according to Cornerstone Macro’s Worth.
“Even as the top five stocks have gone up, their basic relative performance to the market has been down, and that has been the problem with FANG,” he said. “But [Facebook] in particular looks as if it’s going to come to life,” Worth said Friday on CNBC’s “Options Action.”
Despite Facebook’s more than 50 percent rise this year, Worth noted that the stock has yet to make new highs relative to the S&P 500. But the technical setup “looks like it’s going to finally play catch-up,” Worth said.
“Facebook is in a well-defined ascending wedge, and the presumption is after having bounced perfectly three times off the rising trend line, you’re in a position to get a breakout. So I like Facebook here. It is just below its July 27 high. I’m going to make the bet that it will in fact exceed that high,” he added.
Facebook shares were trading nearly 1 percent higher at $174.56 on Monday morning.