Wednesday, October 29, 2014

FB Facebook Weekly Chart Overbot Rising Wedge Negative Divergence

FB is down about -8% pre-market to 74.84 after reporting earnings last evening. This chart was posted two weeks ago  (bring that chart up by typing 'FB' into the search box at the right for further study). The chart was cooked then and had no reason to print additional highs but the bulls managed to eek out more upside perhaps after Zuck was shown talking Mandarin. Maybe he should spend more time running the company instead of studying languages. The MACD negative cross was reversed so watch for that downside confirmation again.

Anyway, the same analysis holds. Stochastics are overbot again. The red rising wedge pattern is ominous and the collapses from rising wedges can be quite dramatic. Price should receive a strong spankdown. The 20-week MA at 73.80 will provide initial support. Strong horizontal support exists at 72.5-72.9. If this fails it is lights out. Expectation is that FB has placed a significant market top that may hold for months, or even years. If you rode it higher, take the money and explore other opportunities. FB can be played from the short side here on out. Keystone does not hold a short position currently. 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 9:01 PM: FB ends the day down -6.1% to 75.86. There's a juicy gap fill needed at 73-74 on the daily chart. CNBC television traders Guy Adami and Pete Najarian tell viewers to buy FB. The chart above says sell. What would you do?

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