Sunday, October 12, 2014

FB Facebook Weekly Chart Overbot Rising Wedge Negative Divergence

Keystone is a guitar player but this morning sets the woodstrings aside and pulls out the brass instead playing 'Taps' on the trumpet in honor of Facebook's topping out and demise. Stick a fork in it, it's cooked. The prior top earlier this year was highlighted by Keystone back then and shorted at the time. Note that all the indicators in February-March were negatively diverged except for the MACD line that wanted another price high after a spank down occurs. Price was smacked down to 55, then recovered for the higher high.

The news with FB over recent months has been generally positive. FB is benefiting from its handling of the mobile segment including mobile advertising. However, all good things come to an end. The red rising wedge, overbot stochastics and universal neggie d across all indicators (red lines) says that the funeral for Facebook is now underway. The pink circle identifies the top print the week before last which came with neggie d across all indicators. Price has no reason to every go up to that level again.

As Keystone often repeats, all together now, the collapses from rising wedges can be quite dramatic. Last week was the first move lower receiving the initial effects of the neggie d spank down. The 20-week MA at 71.44 is an obvious downside target ditto the 50-week MA at 63.37. The 55 level is the make or break level where the stock would likely immediately collapse to 45 if 55 fails. There is a congestion zone at 55-60 so price will likely chomp around in there for a while. The MACD lines have crossed to usher in negativity (red circle). Watch to see if the RSI goes sub 50% into bear territory also to see if the stochastics move sub 80 then sub 50 creating more downside. Note the volume trailing off for the last 1-1/2 year. Pumpers that are shills for Facebook, appear on television telling Uncle Johnny and Aunt Jane to buy FB especially for the long term. At the same time these pumpers and dumpers are distributing their shares to the John and Jane sucka's. Every top needs a bag holding sucker. Uncle Johnny and Aunt Jane placed their entire life savings into FB two weeks ago just like the pundits advised.

Projection is for sideways to sideways lower prices for the weeks and months to come and price may have placed a multi-month and multi-year top two weeks ago. The fall from grace may be quite dramatic if the rising wedge pattern kicks; price can be at 60 within the next week or two. Perhaps Sheryl Sandberg is unloading more of her shares ahead of the negativity. Keystone does not currently hold a position in FB but obviously, as the analysis explains, the play would be on the short side. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 10/13/14: FB finishes dead flat today at 72.99 in a down market tape. CNBC business television trader Guy Adami tells viewers this evening to buy FB with both hands. What do you think? Will Keystone's technical analysis above lead to sad times for Facebook ahead or will Adami's bullish call send price rocketing higher to print furhter new highs? Whose camp are you in?

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