Facebook, Inc. (NASDAQ:FB) Is it Time to Short Facebook?

Facebook, Inc. (NASDAQ:FB) Is it Time to Short Facebook?

Facebook, Inc. (NASDAQ:FB) Is it Time to Short Facebook?

Facebook (NASDAQ:FB) broke out above the $200 level for the first time ever yesterday. FB stock is now up over 30% in less than three months after bottoming out near the $150 level in early April.  The data privacy issues that torpedoed the stock are all but forgotten. Facebook co-founder Mark Zuckerberg is poised to pass Warren Buffett to become the third richest person.

All is good … maybe a little too good. And when things are too good to be true, they usually are. My contrarian trader instinct tells me the time has come to take a short position in Facebook.

Facebook is getting pricey from a historical valuation perspective. FB stock now sports a 33 P/E, nearing the highest level of the past year. The last time Facebook carried such a rich comparative valuation (last July), it put a decided damper on the stock.

Further multiple expansion is unlikely, which should provide significant headwinds to the recent rally.

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 183.87.

The projected upper bound is: 210.93.

The projected lower bound is: 193.48.

The projected closing price is: 202.20.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 79.7292. 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 72.02. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 2 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 151.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 11 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed down -0.500 at 201.500. Volume was 100% below average (consolidating) and Bollinger Bands were 19% narrower than normal.

Open High Low Close Volume___
202.760 203.390 200.090 201.500 531

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 195.74 182.18 177.69
Volatility: 19 32 34
Volume: 15,905,576 20,897,142 23,409,324

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.

Summary

FACEBOOK INC A is currently 13.4% above its 200-period moving average and is in an upward trend. Volatility is 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 39 periods. Our momentum oscillator is currently indicating that FB.O is currently in an overbought condition.

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