Following a well-liked earnings report, Facebook, Inc. (NASDAQ:FB) stock is setting up for profit-taking

Following a well-liked earnings report, Facebook, Inc. (NASDAQ:FB) stock is setting up for profit-taking

Following a well-liked earnings report, Facebook, Inc. (NASDAQ:FB) stock is setting up for profit-taking

What’s there to like about Facebook (NASDAQ:FB) these days? It likely depends on how you look at things off and on the price chart. And in this strategist’s view, for traders long FB stock it may be time to consider unfriending shares and minding the gap.

Let me explain.

Since the market bottomed in late December, it has been pretty much a one-way street in FB stock and one that bulls have benefited from big time. Shares are up a very respectable 34% from their corrective lows. There’s nothing wrong with liking that price action, right?

Well, maybe.

Behind Wall Street’s rekindled friendship with Facebook, bearishly persistent scrutiny of fake news, security breaches, slower growth and increased spending concerns were all but put to rest following FB stock’s blowout Q4 earnings report in late January. In fact, shares jumped nearly 11% immediately after the surprisingly strong results.

Of course, Mr. Market’s influence can’t be denied either. The other fact is roughly two-thirds of Facebook’s gains since bottoming occurred prior to earnings and in unison with the broader averages’ abrupt U-turn out of a correction flirting with bear territory.

Shares of FB have been caught in a narrow trading range wedged in between the 50% retracement level and 200-day simple moving average since the post-earnings price spike. That’s potentially bullish if an upside breakout was to occur. But will it?

I’m concerned Tuesday’s odd failure to participate in the market’s broad-based rally was the proverbial canary in the coal mine for FB stock. It’s my contention shares aren’t going to overcome this key area of resistance and investors that own Facebook should mind the price gap and take profits. And for more aggressive traders, shorting shares below $163 with an initial stop above resistance seems like a very good way to secure additional profits which are at odds with today’s friendly headlines.

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 153.82.

The projected upper bound is: 176.99.

The projected lower bound is: 152.16.

The projected closing price is: 164.58.

Candlesticks

A black body occurred (because prices closed lower than they opened).
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 28 white candles and 22 black candles for a net of 6 white candles.

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 12.4829. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 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 61.55. 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 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 24. This is not a topping or bottoming area. The last signal was a sell 4 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 sell 0 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed down -0.970 at 164.070. Volume was 44% below average (neutral) and Bollinger Bands were 79% wider than normal.

Open High Low Close Volume___
165.380 166.220 163.730 164.070 14,205,146

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 167.19 146.12 166.94
Volatility: 64 55 49
Volume: 23,730,236 25,442,980 24,492,112

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 1.7% below its 200-period moving average and is in an upward trend. Volatility is high 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 bullish on FB.O and have had this outlook for the last 26 periods.

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