The potential trade on Facebook (FB) is still live…but if we don’t see the move we’re looking for by tomorrow’s close, let’s just forget about friending Facebook and move on. (February 06, 2019)
FB QQQ FB
I want to look at Facebook ( NASDAQ: FB ) one more time. Do you know why? Because I think it is time we not look at Facebook ( NASDAQ: FB ) anymore; just a little trading lesson.
What I was looking at (I covered this stock the last two Free Chart Videos) was, I wanted to show you that after a stock gaps up like this and holds you can use the intraday high, in this case, 171.80, you can use the intraday high as a reference for future buys. Because the idea is that, and this is really important, sometimes the best trade is the trade you don’t make. You look at this trade on this day and you can see the high here was actually 171.68. What does that tell you? It tells you that is where the sellers live. At 171.68 there’s a lot of supply there.
What we want to look at in chats is, will there be a change in supply? At some point supply at this level becomes less predominant. It might be because the supply actually starts chasing the stock down. Instead of 171.68 being where most of the selling pressure is taking place it might be at 170.49, it might be 170.00, it could just keep going down. But for THIS day right here post-earnings day, the line of demarcation on January 31st, this is where supply met demand, 171.68.
And so what we do is, we look at this and say, “All right, this is where supply is, as long as that level holds I don’t want to be long this stock. Because this is where the supply is; no reason to be long the stock.” So we look the next day, still there. The next day, actually, it’s still there. A nice move here, right? Well, it wasn’t that big of a deal but it sure as heck didn’t go up to 171.68. So two full trading days later we still have, not supply at 171.68 but fills all the demand but it is actually less than that. The big supply level here came in at 169.25 where the stock closed here.
Now we are up at another day, this is Tuesday the 5th, what was the high? The high was 171.98. So we push up a little bit but you don’t need to get that precise. The bottom line is, there is still ample supply right here at this level. And whenever there is enough demand to push the stock up to that level there are plenty of players that say, “I’ll sell you all you want.” So the stock stops here and then we come to today’s price action.
Now, with each successive day, you see, here’s the low and the high. Higher low, higher high. And then today the high was 172.47. Yesterday was 171.98. So we are actually getting increasing buying pressure from bulls that is actually pushing the stock higher intraday. But then sellers are coming in and pushing the stock down. We can see how the stock traded during the day; it just kind of traded flat to down.
This is what you need to know: I always look at trades and put a time stop on them as well, or and expectation stop, something like that. Where if the stock does not do what I think it is going to do within a certain amount of time then I just assume it’s a trade that is not going to work. So here after 4 complete trading days following this post-earnings move here, I am looking at this and I am feeling like the trade doesn’t have the potential just to keep on pushing higher.
Even though we are getting a little bit more of a thrust intraday to push the stock higher I think that even if Facebook ( NASDAQ: FB ) does start to rally at this point it doesn’t have the explosive move that a trade above this big level would have had, had it occurred one or two trading days afterward. So as it is now you are just seeing the stock meander around sideways, not a whole lot there.
So this is what I would suggest doing: If you don’t see a high volume, this is low volume here gang, if you don’t see a high volume move tomorrow that closes above 172.47, that’s today’s intraday high, if you don’t see a high volume move above that level I would just disregard this and say, “Well, it’s just not a trade. We were looking for it. I thought maybe we might have one but it is just not a trade”
When you look at what is happening with the QQQ‘s ( NASDAQ: QQQ ) where they are right up to the 200-day moving average there is some real selling pressure that is evident here as traders take profits just like they did here and even back here and back here. So this 200-day moving average on the NASDAQ is a key factor, I believe, in this stock ( NASDAQ: FB ) stalling out right here as well.
This is a real treacherous market right now, breakouts are not following through, there is just a lot of nervous money out there. So don’t be trading big. Don’t be taking big risks. Keep your powder dry until the market clears up a little bit. Trust me, I have been doing this for over 20 years; it will clear up. It seems like it’s not; like it won’t because you get impatient but I am going to tell you, patience, persistence, and discipline are the three traits that every single good trader out there has.
If you don’t have patience, persistence, and discipline, and patience and discipline, they kind of go hand in hand. If you don’t have those, look, you are a stock enthusiast and there is nothing to be ashamed about there. But you are not a pro, you are not trying to trade like a pro you are just kind of plinking around in the market; Oh, I like to play the market. Don’t play the market, be a good solid trader in the market. And that means waiting for your signal, waiting for your opportunity. And if the opportunity doesn’t come don’t lower your standards, just say, “Well, I guess there is nothing done today.”
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