Facebook, Inc. (NASDAQ:FB) Earnings Season Is An Opportunity
2018 was a year that Facebook(NASDAQ: FB ) investors would like to forget. FB stock fell off a cliff following self inflicted wounds. And the negative headlines didn’t stop. All told, Facebook stock fell 45% from July highs to December lows.
Luckily this year is a different story, FB stock is up 38% year to date – double the S&P 500 . After the initial plunge, management has been on a campaign to repair its reputation. CEO and co-founder Mark Zuckerberg has even called for government regulatory intervention. At the moment, FB seems to have successfully deflected the attention and passed the risk off to all social media stocks.
The trick seems to have worked as the stock is up massively from December. But it’s not done yet and therein lies today’s opportunity.
The bullish FB thesis here is simple. The macro-economy is healthy and still favors higher stocks. Within that thesis, FB behind its strong fundamentals will continue to rally. If stocks are higher in the future then so is Facebook stock.
So in summary, I would own the shares here for a short term tactical trade that is also a valid long term thesis. Consider it a Plan B in case earnings disappoint.
Experts on Wall Street agree as almost all analysts who cover the stock rate FB stock as a BUY while it still trades below their average price target for the stock.
For those who prefer to use options, I like selling December $125 put options and collect $2 to open. This is money that goes into my account today. If price falls below my strike then I break even at $123 per share. Meanwhile, all I am long FB with a 30% buffer from current price.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 167.91.
The projected upper bound is: 185.78.
The projected lower bound is: 172.34.
The projected closing price is: 179.06.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 25 white candles and 24 black candles for a net of 1 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 78.9657. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 66.56. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 47 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 81. This is not a topping or bottoming area. The last signal was a sell 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 10 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed down -0.780 at 178.870. Volume was 47% below average (neutral) and Bollinger Bands were 3% narrower than normal.
Open High Low Close Volume___
179.000 180.170 178.300 178.870 11,215,193
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 177.07 168.52 162.70
Volatility: 14 26 49
Volume: 13,623,254 16,202,678 24,029,908
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FACEBOOK INC A is currently 9.9% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into FB.O (mildly bullish). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 10 periods.
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