What to do with Facebook (FB) before earnings. Here are some suggestions. (April 20, 2016)
I want to look at Facebook ( NASDAQ:FB ) today, here’s why: Because they report earning a week from Wednesday, that’s on the 27th. Between now and then, frankly, I don’t get the sense that the stock is going to do much of anything except grind around. Why would anyone want to be making a major commitment to a stock just before it reports earnings; especially when the market has been so volatile with some of these high-fliers? Lets just look at the overall trend here to get some perspective. You can see how the stock has been channeling up here, a lot of zigzags, a lot of highs and lows. But if we look at the 200-day moving average there really haven’t been that many opportunities to buy the stock. You can see one there, then this big one (an opportunity to buy everything back in August), and then this one here. So throughout, since 2014 into 2016, this stock really hasn’t hit the 200-day moving average but a couple times.
So if we look here at the WEEKLY chart we get an even better feel for this. Here’s your plan: If you like Facebook ( NASDAQ:FB ), frankly, this is what I’d be doing, I’d be buying some of it even right now. SOME, don’t take a big position like,”Oh, I know they’re going to pop after earnings.” That’s fine, all the way up until they don’t. They may very well do that, but it may not. If I had to choose long or short, I would absolutely be long into earnings. But again, look what happened to Netflix ( NASDAQ:NFLX ). So the point is, if we just zoom out and look at the weekly chart, we can see that the trend is up. I would want to take a partial position here. But the part of my plan is, if I get an opportunity to buy at the 200-day moving average, like we got there, like we got there, and there, almost there, and definitely there, if I get an opportunity to buy, I want to buy more.
So here’s what you do as you go into earnings: You literally look at this thing, you’re long some stock here and think like Cramer, because this is what Cramer would be thinking, “Man, I hope this thing tanks. I hope this thing falls down to $100.00. I hope this thing falls to a point where I can buy it on the cheap.” That’s how you make a trade on Facebook ( NASDAQ:FB ). You take a little bit of stock now, just in the off chance that the stock just keeps going. Because its been on a heck of a trend for a long, long time. But you be ready to buy the stock if it pulls back. Now some traders, you have that as a part of your plan, you freak out when the stock does tank, and you know what you do? You wind up selling the stock that you bought up here. You’re afraid to get the other half of it or three quarters of the position, because you just took a little bit, because you think something is wrong with the stock. Meanwhile, those folks that would be known as “smart money” are buying the stock on the pullback. So going forward now on this one, why don’t you try being the smart money? If the stock pulls back, go ahead and buy it.
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