Here’s the inside skinny on Facebook (FB). (July 29, 2015)
Facebook ( NASDAQ:FB ). After the bell this is where this stock is trading right now. They reported numbers after the bell. I’m not a fundamentalist, I don’t even really use Facebook ( NASDAQ:FB ) much, but I thought the numbers were pretty good. I thought the growth in earnings and revenue was pretty strong, nothing wrong with those numbers. I think this was kind of a classic sell the news type of thing; I was ready to sell the news.
What I mean by that is, I was actually looking for the stock to pop so that I could sell into it, but that’s not really what happened. The reason I was looking for the stock to pop is, first of all it’s Facebook ( NASDAQ:FB ) and it’s kind of popped in the past. But it’s extended, and by the way, it’s been extended before, above the 50 and 200-day moving average, so I was hoping to get that kind of a move, but we’re not getting that.
However, and this is what I want to show you, the badlands of trading after hours. This is what the stock looked like after hours; let’s go to a one-minute here. You can see when they announced earnings. The point is this, this first move is literally like always wrong because it’s light volume in the after hours you get this big massive reaction one way or the other. Now ultimately maybe this move is right, maybe Facebook ( NASDAQ:FB ) tomorrow is $90.00.
But what I’m saying is you get this big reaction one way after hours and then the stock almost always snaps back one way or the other. If it’s a big pop it goes up way too far and then 2-minutes later, 5-minutes later it’s coming back the other way. Well look what happened to Facebook ( NASDAQ:FB ) here. The stock literally came up to a new high in the after hours trading. Volatility squeeze, Boom! Now it’s sold off and it’s in another squeeze. I’m doing this video at 4, 5, 6:00 Eastern time, nobody’s trading; oh look, somebody traded a share.
So here’s what I want you to do though, I want you to look at Tuesday’s intraday low here of 93.31. You see this stock, again, this is not the type of earnings that somebody’s going to say, “Okay, all right we’re done! Facebook ( NASDAQ:FB ), over. Unlike.” These are good numbers, this stock is not even below Tuesday’s intraday low, so it’s really holding this resistance.
If this were just another day, just kind of another day as opposed to the day that earnings were reported, we would just look at this and say, “Well, there’s support. Oh! Well the stock’s forming, it’s not really a flag pattern that was a while ago. The stock is just kind of drifting around sideways here letting these moving averages catch up to it. Boy it sure would be healthy to see it do that for another week or two.” And then the next leg higher starts.
I can see that happening with Facebook ( NASDAQ:FB ). Don’t know for sure, but all I’m saying is, this after hours reaction, sure would have been nice if it popped up to $100.00, and it looked like it was going there after hours. But I’m saying, this after hours reaction is not really that bad. Don’t be surprised if you see Facebook ( NASDAQ:FB ) trade up higher tomorrow morning. I would just say this; if you’re long the stock have a stop somewhere. The stock used to be at the 50-day moving average back in the early part of last month.
If the stock fell back to the 50-day moving average, which is down here at 87.00, there would be nothing wrong with the trend. You would look at this several months from now, after having seen the stock do this, and you would say, “Wow! This was a nice little consolidation here. It kind of drifted into the 50-day moving average, gave it a chance to catch up; the 200-day moving average is doing this; that turned out to be a pretty good opportunity to buy in the 90.00’s.” That’s kind of what I see with Facebook ( NASDAQ:FB ).
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