FB Facebook Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Price Extended; Upper Band Violation

The monthly candlestick for FB is a doji which typically signals a trend change. The red lines show negative divergence in play across the board. RSI and stochastics are overbot and the red rising wedge is in play. All these parameters conspire to create the pull back in December.

However, the MACD line likely wants one more high. When the high in price was printed in November, all indicators are neggie d except the MACD; it was still sneaking higher, that bugger. This hints that after a spank down occurs in this monthly time frame, price should come back up one more time so the MACD line can then negatively diverge and the top will be in. Thus, Facebook is likely printing a major top now through March and that top may hold for months and years ahead.

Price is extended above the moving averages requiring a mean reversion. FB tagged the upper standard deviation band so the middle band at 144 and rising is on the table.

The ADX was way above 50 in 2015 verifying that the upside trend was one of the strongest in market history, however, with higher highs in price, the ADX is down at 42, trying to recover, but below the highs two years ago. The strong trend higher in price is fading over the last couple years.

The blue circles show distribution taking place the smart money is passing off shares to the dumb money. Joe Retail takes a swig of beer and gets caught up in the Facebook and FAANG-stock hype. He is buying Facebook shares from the institutions that are dumping shares.

Note that price moves higher one month and then the following month the retail bag holders start buying. The larger sell volume candle in the month after the buy volume candle shows distribution; how the smart money is setting up Ma and Pa Kettle, Cousin Frank, Aunt Mary, Timmy Tech and of course Joe Sixpack as the bag-holding sucka's.

Facebook will likely place a multi-month and multi-year top between now and March. If you enjoyed lots of profits in FB, it is likely wise to take the money and run. If you are hesitant to give up on the big winner, scale out by thirds say; sell one-third January, another third February, and the last third in March. FB may seek 106-150 this year. Keystone does not have a position in FB but if price comes back up again as described above, perhaps February, and the MACD line is rolling over with neggie d, Keystone will short it. 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.