The prospect of increased regulation is coming back to haunt Big Tech.
State attorneys general are reportedly preparing to launch a joint antitrust investigation into Big Tech, which could put Apple, Amazon, Facebook and Google parent Alphabet under the microscope, according to The Wall Street Journal. Any state-level probe would be in addition to scrutiny already coming from Congress.
Miller Tabak equity strategist Matt Maley said increased regulation would not do well for the so-called FAANG stocks -- Facebook, Amazon, Apple, Netflix and Alphabet -- which have already struggled to break out above a September peak.
"Recently, they made some higher highs, but kind of minor higher highs -- not above their all-time highs and then rolled back over in kind of a failure, and you know, kind of a head fake. And that's always negative on a technical basis," Maley said Monday on CNBC's "Trading Nation."
The FAANG stocks have had varied performances this month so far. While Apple is flat in August, Alphabet and Amazon have fallen by more than 2%, Facebook by 6% and Netflix by 7%
"That's a concern, especially as we move towards the 2020 election, and when Congress comes back from recess, that kind of bipartisan feeling towards the regulation could cause some problems for the group," Maley said.
One stock looks particularly vulnerable to Maley: Amazon.
"It's already broken below its trend line going back to the December lows so if it rolls back over again, it takes out its June lows, which was just below $1,700, that's going to confirm that its intermediate-term trend has changed to the downside," Maley said.
Gina Sanchez, CEO of Chantico Global, is also steering clear of these high-growth consumer and tech names until market swings cool down.
"I'm not that positive on Netflix. And I am concerned that as we continue to slow, companies like Amazon will potentially start to get hit," Sanchez said Monday on "Trading Nation." "The outlook for these I don't think is as positive if you consider that they're going to get probably more whipped around by the volatility that continues to be brought on the market by the trade war."
The VIX index, which measures volatility, spiked above 24 at the beginning of the month. That was the highest level since December when the FAANG stocks tanked by at least 5%.
"I'm not sure this is a great time to be looking at these for investment. They're just simply the front end of any new volatile cycle," Sanchez said.