Looking at Facebook (FB)? Here is the hard truth. (March 19, 2018)
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Just a quick video on Facebook ( NASDAQ: FB ). First of all just to look at the overall market; I would just avoid buying any new stock right now. Just avoid it, you don’t have to trade every day. Be careful and check your actions. Are you addicted to trading or are you addicted to making money? Those are two totally different things. One of them you are going to be trading more. The other you are going to be trading less. I will let you figure out what is what.
Let’s look at Facebook ( NASDAQ: FB ). You have got to know what happened; for lack of a better term a big data breach at Facebook ( NASDAQ: FB ). It wasn’t like the Equifax thing; if you have a Facebook ( NASDAQ: FB ) account you gave them permission to do everything they are doing, you just didn’t know it. And then sometimes they just kind of inadvertently collect other data that you didn’t give permission to do. But it was just an error and thanks to the government or whatever, for bringing it to our attention. We will fix that immediately because Lord knows we wouldn’t want to violate our user’s privacy. That is what you hear from these guys all the time. There is a big issue now whether Facebook ( NASDAQ: FB ) might even be regulated more, please.
But the bottom line is this stock fell, at one point, over 7 percent; I think it was almost 8 percent down. So where does that lead us now? Is this a screaming buy? I wouldn’t say it is a screaming buy but I would say that this has held above 170.00, it washed out our bull put spread, at least for today. The bottom line is the stock is under distribution. You will hear a lot of money managers defending it. Look, just about every big fund owns some Facebook ( NASDAQ: FB ). It is going to have to take a lot more than a data breach or miss use of data or whatever you want to call it. It is going to take a lot more than that to push this stock down and you will totally see it if it does. You will absolutely see that this stock is under huge distribution. Right now it’s really not gun to head.
I would buy this stock and I would probably look to sell it if it hit 180.00 or so. And this is just generally why: The stock is in this trading range. It is down at the bottom of the range, it has been trading really, really sloppy, really sloppy. So is this really worth the effort? Again, if I had to choose between buying and selling, I would buy it. Look at the weekly chart, the stock hardly ever gets back to the 40-week, which is the 200-day moving average, and it has always been a good buying opportunity. So yes, I would do that right now.
But, if we look at it in these terms, relative strength, relative to the Nasdaq, what we want to see is this blue line down here; we want to see it trending higher. This is what we want to see, we want to see the line going this way. When it is moving that way, that means that you would rather, rather than own Facebook ( NASDAQ: FB ) just own the QQQ ( NASDAQ: QQQ ), it works better. With Facebook ( NASDAQ: FB ) I would say if you are interested in outperforming the market this week or next week Facebook ( NASDAQ: FB ) isn’t your deal. If you are looking for a long-term position and you really trust Mark Zuckerberg, you like Facebook ( NASDAQ: FB ), you think it is just going to continue to go higher, then this is a stock that you should own. This is a very, very rare entry for you.
If you are like me, frankly, I am just avoiding it. The main reason is just this relative strength. If this was relatively strong I would look at this as a big buying opportunity but it is not. You can see that relative to the Nasdaq. This has actually been weak all this year. It really started to weaken in November right around the election. Why is that? Because everything else was screaming and Facebook ( NASDAQ: FB ) just kind of traded sideways. Short-term maybe you might get a point or two out of this. Long-term you go ahead. If I owned shares I would sell them to you. By the way, if the stock starts trading below, say 165.00, I think you definitely need to ‘unlike’ this thing and just move on.
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