Facebook (FB) Stock Review: Downtrend Remains, But Selling Less Aggressive
In my first post regarding the Facebook (FB) IPO, I talked a lot about waiting at least 10 trading days before making a decision on whether to trade the stock. Â While my initial theory of the stock running up for a few days didn’t play out the strategy of waiting proved again to be effective. Â The important take away from the first post was that if you jump in the first day, you run a big risk of getting burned and that’s exactly what happened to those that didn’t resist the hype and jumped into the fray. Â There has been a lot of anger amongst retail investors and resulting law suits due to the drop. Â To that I say, I don’t feel sorry for those that lost. Â You gambled and lost. Â End of story. Â Had the stock gone up, the issues at the Naz, the rumors of Morgan Stanley revealing inside information and all the other excuses would have been a moot point.
====>Â Get Your Daily Facebook Trend Analysis Here
This post isn’t about dissecting what went wrong after the stock began trading. Â There has been plenty of discussion around that which most people are aware of. Â I’m here to focus on how to trade the stock from here since the first 10 trading days are behind us. Â Now we have a much better since of the trend of the stock and the conviction of buyers and sellers.
Taking a look at the chart below, you’ll notice that Facebook (FB) stock remains in a firm downtrend. Â However, there are some signs that the tide may begin to turn. Â I say that because of the minor capitulation day last Thursday when the stock made a new low, recovered, and closed the day in the upper half of the trading range on higher volume than the day before. Â That’s a sign that buyers found a place where they’re willing to come in and support the stock. Â Since that day, the stock has continued lower and even hit another low in today’s trading. Â However, notice the sell volume diminishing which is an indication that selling conviction is waning.
Is it time to jump into the stock then? Â The short answer is NO. Â We still have a firm downtrend in FB and until that downward trend is broken and buy volume picks up, there is little indication that the trend down can’t continue. Â Even then, if you’re considering a position in Facebook, I would not buy my entire position all at once. Â You might consider a third on a break out above the downtrend, another third on a pull back off that initial move and the next third on a breakout from that consolidation. Â I’ll have another review of Facebook (FB) in a week or two to see where we’re at.
====>Â Get Your Daily Facebook Trend Analysis Here
Disclosure: Â I have no position in Facebook (FB) stock.
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