Social Media Stocks: Is A Bounce Brewing?

Have you been tracking social media stocks?

Most of ‘em have been down, down, down.

Early last month I told you how anti-social Mr. Market has been acting lately. That’s because at the time, the market was throwing these stocks off a cliff. And sitting here just a month later it’s clear that some haven’t even come close to recovering.

But fear not, young trader. The charts are showing viable trades finally popping up in this once-hot space. And today I’ll show you one that has a great chance to deliver double-digit gains in a matter of weeks. Can’t turn your nose up at that…

Look, this is a market of stocks. Some sectors are hot. Some aren’t. Some groups within an industry do well—like Facebook. While others are repeatedly thrown down a staircase into a pit of vipers—like Twitter.

If you’ve been around for a while you know we’ve been playing social media stocks off and on for a long time. And these stocks have been good for one thing: making a quick buck. Sure, there are quite a few crappy social media stocks out there. Not every stock is perfect.

And last time we checked in on this crew, most of ‘em were reeling from bad earnings.

Twitter (TWTR) was down more than 20% in just eight weeks. LinkedIn (LNKD) had shed 24% over the same time frame. And Yelp (YELP) had dropped 17%. To call it a bloodbath was the understatement of this young century.

So it’s no surprise that many of these social media misfits became lepers. And even weeks later, plenty of longer-term investors still won’t touch ‘em. Maybe that’s why a prominent Twitter investor just released an 8,000-word report on strategies he believes will pull the company out of its tailspin.

Will any of these ideas work? Is this the sign of desperate investors just trying to claw some of their disappearing cash back before the whole thing erupts into one big, spectacular mess? I have no clue.

But what I do know is that there are some social media stocks that are on the comeback trail—and some that never left the fast-track to profits. Just look at how Facebook (FB) and LinkedIn shares are starting to wake up:

Over the past month, Facebook and LinkedIn shares consolidated, then blasted higher. The major averages? Not so much. The S&P 500 is about where it was toward the beginning of May.

I think you’ll “like” these social media stocks a lot over the next few weeks.