Market Overview

Facebook Top: Stock Chart Tells Of Coming Down Move

Share:
Related FB
Top Stories From The Week Ending January 30: Apple Earnings And More
After Wild Earnings, How Do Big Tech Stocks Compare On Fundamentals?
Many Leading Stocks Stumble But Biogen, Harman Soar (Investor's Business Daily)

Facebook Inc (NASDAQ: FB) is having a fantastic day. The stock hit a new all time high of $49.66. However, the charts tell the future and the future is not green for Facebook. Instead, it is cluttered with down days and a pull back to the $45.65 and $42.45 levels.



So why when the world is so bullish on Facebook is the top in? The answer is somewhat simple. First, with the world so bullish on Facebook or on any stock, one must be wary as a reversal is likely. A great example of this was Apple Inc. (NASDAQ: AAPL). When the stock was at $700 a share, analysts were upgrading like crazy and the whole world was talking about it. This has now happened with Facebook. Today, happens to coincide with an analyst upgrade as well. Go figure, an analyst upgrades the stock now when it is up 100% in the last few months. Definitely similar to Apple at $700 per share. When looking at the stock chart of Facebook, the first thing that jumps out to me is the symmetry. The price hovered around $25.00 a share for a long period. After earnings it shot up to a high of $49.66. This is a 100% move in the stock. In addition, notice the selling that has come in off the highs today. Major distribution from institutions. Last, notice the tail on the chart today. As the stock declines, it forms what could be a topping tail on the daily chart. Should a topping tail form, it will solidify a major top in the stock for a pull back to the mentioned levels of $45.65 and $42.45. Normally, I do not mention valuation but even that is way beyond stretched. 



The bottom line sits at an overbought Facebook chart that has too many amateur bulls long and reversal signals everywhere. Cheers to a great shorting opportunity. 

Gareth Soloway
InTheMoneyStocks.com

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

image
The Leader In Market Technical Guidance www.InTheMoneyStocks.com Follow our Pro Traders Rant & Rave Blog and look over the shoulder of real pro traders! https://www.inthemoneystocks.com/n_rant_and_rave_blog.php

Posted-In: Markets Tech Trading Ideas

 

Related Articles (AAPL + FB)

Around the Web, We're Loving...

Get Benzinga's Newsletters