Market Overview

A Technical Look: Facebook Shares Stall, Need To Break Above $218 For Next Rally

A Technical Look: Facebook Shares Stall, Need To Break Above $218 For Next Rally

Shares of Facebook, Inc. (NASDAQ: FB) are on track to end 2019 with a gain of more than 50% and now needs to climb above $218 before kicking off a fresh rally, Fairlead Strategies founder Katie Stockton said Wednesday on CNBC.

Cup And Handle

Facebook's stock chart shows a clear long-term uptrend across multiple time frames, Stockton said. The chart also shows a potential bullish long-term formation called a "cup and handle" but the stock needs to breakout above its final resistance level near $220 per share.

A cup and handle refers to a technical pattern in which a stock slumps and recovers to form a U-shape followed by a period of consolidation -- the "handle" part of the term. Facebook formed the "cup" part of the equation in the fourth quarter of 2018 and entered the "handle" portion in the late-summer period.


Cahrt via TradingView.

See Also: Facebook's Strong Quarter, Outlook Have Sell-Side Hitting Like On The Stock

Barriers To Entry

Social media companies aren't as isolated from new competitors as many think. John Petrides, portfolio manager at Tocqueville Asset Management, also said the barriers to entry in the social media space is "not very high" as three years ago Snap Inc (NYSE: SNAP) was "all the rage" but today TikTok is the one gaining momentum.

"Ten years ago, we were talking about MySpace, and now here we are where there's so many more platforms, where it's the easiest in the history of mankind to distribute your message across multiple platforms," he told CNBC.

Looking forward to the next 10 years, Facebook and other social media platforms could be impacted by the "dilution of eyeballs" since there are already "way too many" platforms available.

Facebook's stock traded around $205.11 per share at time of publication.


Related Articles (FB)

View Comments and Join the Discussion!

Posted-In: CNBC Katie Stockton social media Trading NationTechnicals Media Trading Ideas Best of Benzinga