Facebook, Inc. (NASDAQ:FB) Mistrust Will Hurt FB Stock
In an article published on Oct. 25, I noted that Facebook had made multiple, alleged misstatements. I quoted Facebook’s VP, Business and Marketing Partnerships, David Fischer, as saying in 2016 that, “We know we can’t have true partnerships with our clients unless we are upfront and honest with them.” I agreed, writing that FB had “jeopardized its relationships with … advertisers” by allegedly downplaying the degree to which it had exaggerated the amount of time spent watching videos on the website.
Now more allegations of duplicity against Facebook, by a largely reputable, well-respected source, have surfaced. Specifically, on Nov. 14 The New York Times reported that in early 2017, Facebook COO Sheryl Sandberg, Zuckerberg’s No. 2, decided not to disclose Russia’s involvement with political advocacy on Facebook. According to the newspaper, FB kept a lid on the information “throughout the spring and summer of 2017.” When the company finally decided to disclose some information about the Russians’ activities, Sandberg ordered the disclosure to be “less specific,” The Times stated.
This second major episode of dishonesty by Facebook will further undermine the ability of advertisers, regulators and consumers to trust the company. As a result, advertisers will be less likely to rely on the data they receive from Facebook, and they will be more likely to use other digital advertising options, hurting FB’s results and Facebook stock.
Consumers will be less likely to share financial and highly personal information with Facebook, undermining the company’s attempts at direct sales and hurting its engagement numbers. Finally, government regulators will be less likely to trust the assurances they receive from FB, increasing the likelihood of governments using onerous regulations to rein in the company.
Additionally, The Times reported that a lobbying firm hired by FB wrote “dozens of articles blasting Google and Apple (NASDAQ:AAPL) for unsavory business practices.” The firm also sought to link opponents of Facebook to billionaire liberal activist George Soros, The Times stated. It seems that FB was trying to link its opponents to Soros in an effort to convince conservative activists and Republican lawmakers to side with Facebook.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 155.49.
The projected upper bound is: 146.14.
The projected lower bound is: 126.44.
The projected closing price is: 136.29.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold (which appears to be the case with FACEBOOK INC A) to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with FACEBOOK INC A) it is called a bullish hammer.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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 85.3173. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 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 40.71. 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 buy 4 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 -51. This is not a topping or bottoming area. The last signal was a buy 2 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 sell 11 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed up 1.760 at 136.760. Volume was 5% above average (neutral) and Bollinger Bands were 2% wider than normal.
Open High Low Close Volume___
136.280 136.790 131.850 136.760 29,847,504
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 136.63 151.28 173.26
Volatility: 50 42 46
Volume: 28,815,872 26,176,310 27,668,122
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 21.1% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of FB.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on FB.O and have had this outlook for the last 47 periods.
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