Facebook, Inc. (NASDAQ:FB) short term opportunity
Stock owners fall into two categories. There are those who are in looking to invest for the long haul. And then there are those who prefer to trade momentum, which tend to be shorter term.Today’s write-up is to examine how Facebook (NASDAQ:FB) stock now presents the opportunity for both traders and investors. There is a technical breakout brewing in FB for the short term with 20% upside potential. But even if it fails the trade can be a viable long term investment.
But first I’d like to recognize the geopolitical headlines that threaten stocks this week. If the bond market continues its breakout here, then all stocks will fall. So consider that and how it influences even quality stocks like FB.
The FB Fundamentals
Facebook is a giant advertising company and it has unparalleled reach. Those who use it for business love what it does for their marketing campaigns. Last year it suffered great trepidation from a data sharing incident but it has so far survived the repercussions from it. There are still those who are calling for its head but I doubt that they will be successful.
As big and as popular FB is, it will take a special kind of mistake to mess that potential up. They have billions of users using their platforms every day and for hours at a time.
The fundamental metrics of FB stock are solid. it’s a cash making machine and it’s not bloated. It sells at a 27 P/E ratio. This is inline with Alphabet (NASDAQ:GOOGL) and 60% cheaper than Amazon (NASDAQ:AMZN). I can also compare FB to Apple (NASDAQ:AAPL) and Twitter (NYSE:TWTR) which aren’t perfect comparisons but help with perspective, they have 16 and 21 trailing P/E respectively.
Moreover, FB is up 40% year to date which is almost three times better than the S&P 500, twice as good as AMZN and four times better than GOOGL. Clearly investors are liking FB stock in 2019. Facebook is up 200% in five years.
So for now, Facebook doesn’t carry undue risk for those who own its shares. So betting on it here has relatively small financial risk in the long term. There is value below so even if the stock market temporarily corrects, Facebook stock will eventually find footing. Besides, the market-wide selloffs that we had last year helped establish great support levels.
So in summary, the fundamentals are strong enough that we can assume that if the stock markets are higher in the future then so is Facebook.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 189.80.
The projected lower bound is: 172.24.
The projected closing price is: 181.02.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.
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 42.0364. This is not an overbought or oversold reading. The last signal was a sell 20 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 44.12. 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 12 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 -106.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 6 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 12 period(s) ago.
Rex Takasugi – TD Profile
FACEBOOK INC A closed down -4.450 at 180.870. Volume was 29% below average (neutral) and Bollinger Bands were 21% narrower than normal.
Open High Low Close Volume___
182.420 183.900 179.670 180.870 12,768,835
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 184.29 179.27 161.49
Volatility: 34 31 40
Volume: 12,706,280 16,854,122 22,173,370
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 12.0% above 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 4 periods.