Is it time to like Facebook (FB)? (June 10, 2014)
I want to look at Facebook ( NASDAQ:FB ), most notably Facebook ( NASDAQ:FB ) as it looked yesterday. Let’s just go through this analysis because I think Facebook ( NASDAQ:FB ) is something to buy right here, right now, except you’re looking at this when the market’s closed. This stock was in kind of a loose volatility squeeze, not super tight, but not exactly wide ranging either. The stock was in a volatility squeeze, higher lows, higher highs, until here when the stock just started trickling sideways.
Well, the market has been really strong, there’s nothing bearish about this. The fact that the stock broke above this level right here, which you could say that was really where the downtrend was. So the stock breaks above this level on decent volume, if it wasn’t for the big selling back here this average volume would actually be a little bit lower, in fact let’s do this; I just changed this moving average from 50 to 21, there’s a average of 21 trading days of each month. So now this stock on this breakout was a little bit closer to average volume, which was a positive sign. But for me what was more important is that the stock did not fall below this low here.
When you see that it’s not really a flag pattern it’s just kind of like a box full of consolidation above a bit of a breakout. When you see that this is what you want to do; you want to look at this last high here, if you look at the upper left-hand side that was $64.30, so you could set an alert at 64.30, totally forget about this stock, and then what happens today, the stock trades above 64.30, your alert flashes. Whether you choose to buy the stock, that’s a choice that you make, but at least you got alerted to the fact that Facebook ( NASDAQ:FB ) has broken to a new high. Your analysis has already been done; you performed your analysis when the stock was here. When it was back here and you’re saying, “I think after this kind of breakout Facebook ( NASDAQ:FB ) could start to move higher so I’m going to set an alert. If the alert triggers I’m likely to buy this stock.” You don’t say absolutely for certain, but you say “You know what? This is a pretty good indication if that happens, particularly if it happens on heavy volume.”
We’re already long this stock via some call options at Option Market Mentor, but I don’t think it’s too late for you to buy this stock, because I think this stock ultimately blows through this last high here, it’s probably going to eclipse that and continue further. This has been one long consolidation for Facebook ( NASDAQ:FB ), months. The best thing for this stock long-term is for this stock to be in this consolidation and then ultimately breakout to the upside. So I think you probably need to “like” Facebook ( NASDAQ:FB ).
Free Chart