Saturday, January 14, 2017

FB Facebook Monthly Chart

FB has rallied strongly for over 4 years. The ADX was above 50 showing a strong trend higher in place through 2015. Price topped out with the overbot conditions, rising wedge and neggie d in October which created a two-month spankdown. However, the money flow was long and strong so you knew price would want to come back up again after some selling, and it is. Facebook is a up a big +12% in January.

Facebook has been receiving bad press lately for its fake news stories, and preference to post liberal-leaning stories in the news feed. Privacy issues are an ongoing problem. Also, nutcases are performing crimes and posting the video feeds of the heinous acts in real-time. Technology has made society ill.

But this year is a different story. Each money manager thinks they are smarter than the other touting Facebook louder than the other as the best stock pick for this year. The chart is not impressive. Price may target that upper band at 138 or simply go for a higher high at 133+. At the matching price high at 133 and above, check the indicators to see if they are all negatively diverged (remaining under those thin red lines). If price makes the higher high at 133-138, and the indicators are neggie d, a smack down is at hand.

Facebook is likely topping out on this monthly basis in the first half of this year. Watch to see if the ADX falls under 30 which would mean that the once-strong upward price trend is petering out very very fast. Do not get caught up in the Facebook hype.

Price has violated the upper band so the middle band at 111 remains in play and the lower band at 84. The bands are pinching in so price will likely top out in this 128-142 range over the next few months. Price is extended above the moving averages and needs a mean reversion lower. 
You do not want to own this stock. If long, it is likely prudent to scale out going forward and just let that money sit to the side in cash. 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.

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