PreMarket Prep Stock Of The Day: Facebook

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

The political environment is exerting a lot of selling pressure in social media stocks, and Monday's PreMarket Prep Stock of the Day Facebook, Inc. FB is no exception. 

What A Year For Facebook: After ending 2019 at $205.25, Facebook peaked ahead of the S&P 500 in January 2020 at $224.20 and retreated to end the month well off that high at $201.91. When the index buckled in February and March, Facebook went along with it.

It found a bottom a few days ahead of the index on March 18, $137.14, and only reached $142.23 on March 23, the day the index bottomed. The low on the 18th marked the lowest level for the issue since January 2019, when it bottomed at $128.56.

It easily surpassed its former all-time high in May and kept going.

Interestingly, Facebook made its ultimate all-time high in August at $304.67.  After a retreat from that elevated level, it made another attempt to reach $300 but was turned back in November at $297.38.

Although it had a lackluster performance in the second half of the year, Facebook gained 33% for the year compared to only 16% for the index.

Facebook Off To Rough Start In 2021: While the index got off to a rough start last Monday, it blasted to new all-time highs for the remainder of the week,  After ending 2020 at $273.16, Facebook briefly traded over that level last week, peaking at $275 and ending the week slightly in the red ($268.94 vs. $267.57).

Facebook Is Technically Vulnerable: The Street is clearly taking the sell now, ask questions later approach to the issue in Monday's session. With the future regulation of social media in flux, investors are not sticking around to find out what will happen.

After a lower open, it continued in that direction before finding support at $255.90 and reversing course. That low coincides with Facebook's Oct. 7 low ($254.82).  So far the rebound off that low has yet to reach the bottom of Friday’s range ($263.18), as $262.80 stands as the high for the day as of 11 a.m. 

Facebook Moving Forward: From a monthly perspective on the charts, the issue is in “no man’s land.”  While it trades comfortably above its post-all-time high low from September ($244.13), it has formed some major monthly support ahead of that low. 

Including January price action, three of the past four monthly lows come in a well-defined area ($254.82 to $257.34), with Monday's low being almost in the middle ($255.90).

The lower it repels from its current area, the lower investors will bring down their offers to exit the issue on strength.  If the issue breaches the $255 area, the next support may not come in until its August low ($244.13).

Facebook shares were trading down 2.34% at $261.32 at last check.