Facebook, Inc. (NASDAQ:FB) Shares Downgraded

Facebook, Inc. (NASDAQ:FB) Shares Downgraded

Facebook, Inc. (NASDAQ:FB) Shares Downgraded

Shares of Facebook FB dipped over 3% Tuesday after MoffettNathanson analysts downgraded FB stock, citing the possibility of increased regulation and lower profits. The move comes as part of a month-long decline in the wake of its infamous Q2 earnings release. So, is it time to sell Facebook stock?

Downgrade

MoffettNathanson lowered its rating for Facebook stock from “buy” to “neutral,” noting that its earnings are expected to be much lower. “We believe that revenue growth deceleration coupled with the company’s long-term margin guidance does not provide a meaningful near-term path for outperformance,” analyst Michael Nathanson wrote in a note to clients Tuesday.

“Facebook is increasingly under the eye of global politicians and regulators, which will force the company to become more aggressive on spending to show contrition. … The deceleration in growth, coupled with continued regulatory scrutiny, is a toxic brew for any stock.”

The analyst also lowered his price target for shares of FB from $200 to $175. Investors should note that Facebook stock closed Friday at $175.73 per share. “We do not see outsized performance on the horizon as Facebook’s core platform is maturing and monetizing Stories may not be the runaway success needed in the near-term to pick up the slack,” Nathanson continued. “Further, expenses are expected to stay elevated as Facebook plays catch-up to secure and refresh its platform.”

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 183.31.

The projected upper bound is: 189.87.

The projected lower bound is: 151.23.

The projected closing price is: 170.55.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 3 falling windows in the last 50 candles–this makes the current falling window even more bearish.

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 35.1960. This is not an overbought or oversold reading. The last signal was a buy 7 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 36.32. 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 22 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 -131.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 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 5 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed down -4.570 at 171.160. Volume was 30% above average (neutral) and Bollinger Bands were 42% narrower than normal.

Open High Low Close Volume___
173.500 173.890 168.800 171.160 29,808,972

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 174.80 188.69 181.60
Volatility: 22 63 45
Volume: 19,375,926 26,549,604 26,318,426

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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FACEBOOK INC A is currently 5.7% below its 200-period moving average and is in an downward 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 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 26 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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