Facebook (NASDAQ:FB) Shayne Heffernan Says Investors Should Wait and Buy on Dips

Facebook (NASDAQ:FB) Shayne Heffernan Says Investors Should Wait and Buy on Dips

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Facebook
Ticker: NASDAQ:FB
Price: $266.72

Facebook Outlook

Facebook (NASDAQ:FB) traded lower on Wednesday, after it hit resistance on Monday near the prior upside support line drawn from the low of Mar. 18. Although the price is back above all three of our moving averages on the daily chart, the fact that it retreated after hitting that prior upside line suggests that more declines may be in the works.

However, in order to get confident on that front, we would like to see a decisive dip below the 268.00 zone, which is marked as a support by the inside swing high of Oct. 1. In case this happens, we may see FB sliding towards the 247.00 zone, which provided decent support between Sept. 21 and 25, and also acted as a resistance between July 7 and 21.

The price could temporarily rebound from there, but if it’s unable to climb back above the pre-mentioned upside line, we may see another drop, perhaps below 247.00 this time. This is when the price may slide to 227.00, which is the low of July 24.

Shifting attention to our daily oscillators, we see that the RSI, although above 50, has turned down, but the MACD remains above both its zero and trigger lines. Both indicators still point to upside momentum, albeit a slowing one, and that’s why we prefer to wait for a dip below 268.00 before we start examining the downside scenario.

On the upside, a break above 291.00 is the move that could brighten the stock’s outlook. The share would already be above the aforementioned upside line, with investors perhaps aiming for the record peak of 304.75, hit on Aug. 26. If that level does not hold this time around, then investors will have to deal with levels not seen before and establish new resistance zones.

Business Summary

Facebook, Inc. is focused on building products that enable people to connect and share through mobile devices, personal computers and other surfaces.

The Company’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus.

Facebook enables people to connect, share, discover and communicate with each other on mobile devices and personal computers.

Instagram enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends.

Messenger allows communicating with people and businesses alike across a range of platforms and devices.

WhatsApp Messenger is a messaging application that is used by people around the world and is available on a range of mobile platforms.

Its Oculus virtual reality technology and content platform offers products that allow people to enter an interactive environment to play games, consume content and connect with others.

Price Performance

Relative Valuation

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 258.99.

The projected upper bound is: 287.29.

The projected lower bound is: 246.85.

The projected closing price is: 267.07.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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. The two candles preceding the falling window were black, which makes this pattern even more bearish.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is 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 59.8455. This is not an overbought or oversold reading. The last signal was a sell 1 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 51.37. 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 29 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 22. This is not a topping or bottoming area. The last signal was a sell 0 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 11 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed down -5.100 at 266.720. Volume was 37% below average (neutral) and Bollinger Bands were 19% narrower than normal.

Open     High      Low      Close      Volume
267.600  269.040   263.670  266.720    15,416,064
Technical Outlook
Short Term:        Neutral
Intermediate Term: Bearish
Long Term:         Bullish
Moving Averages: 10-period     50-period      200-period
Close:           266.00        268.36         223.62
Volatility:      40            47             57
Volume:          18,154,056    24,432,762     23,535,910

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 19.3% above 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 22 periods.

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