FANG gets its bite back – but there’s one name that could sit out the rally

FANG stocks are getting their bite back, but there's one name that sat out the rally on Thursday – Facebook.

While shares of Amazon, Netflix and Alphabet were sharply in the green Thursday afternoon, Facebook shares were struggling to stay afloat. TradingAnalysis.com founder Todd Gordon says the technical setup for the social giant is weak.

Gordon pointed out that while Facebook has rallied about 1.5 percent in the last week, the stock is still lagging the market, as during that time the Nasdaq has rallied 6 percent.

"I believe this recovery rally in the market is sellable, and with an underperformer like Facebook, it's time to go to work," he said Thursday on CNBC's"Trading Nation."

Not only that, but Gordon also sees a "two-step pattern" that he thinks is a bearish sign for Facebook. "This is a very common corrective structure that happens when you have a move that is trading counter to the trend, which I believe is now down," he explained.

To play for a move lower in Facebook, Gordon wants to buy the March 175-strike put and sell the March 170-strike put total of $1.45, or $145 per options spread. This is a bearish bet that Facebook could fall as low as $170 — or 5 percent — by March 16, which could precede an even bigger move down to the $150s in the trader's eyes.

Should Facebook close below $170 on expiration, then Gordon could see a maximum reward of $355, while he would lose the $145 premium he paid if Facebook closed above $175. To prevent the loss, Gordon wants to establish a point at which to stop out of the trade.

Based on a Fibonacci retracement, Gordon believes that $189.50 is the ideal level to get out of his trade, with Facebook trading at around $178 on Thursday.

Facebook has fallen more than 7 percent from all-time highs the stock hit on Feb. 1. It is currently up just 1 percent year to date.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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