Here’s the trade on Facebook (FB).
Discussed in this article: Facebook Inc. ( $FB )
I want to look at Facebook (NASDAQ:FB ) today. After hours the company announced earnings, and rather than being down almost 3 percent the stock gapped up. Now it’s trading really right at this resistance level. So here’s the thing, fundamentals, as far as Facebook (NASDAQ:FB ) goes, It’ too complicated for my little pea brain, I’m a simple man, but I know this, there’s a lot of resistance right here, folks that bought basically right at the high, that’s where the logical sell place is.
However, it’s not like this has been going on for very long, it’s not like this is just this massive resistance level that’s has been tested multiple times. Let’s just draw a little square here, see the trading volume, it’s actually been pretty low, so up here where the stock was just kind of grinding around up near resistance, the trading volume was pretty low so it’s not like there’s a big commitment to these prices, that’s just not the way this thing is trading. So here’s what I think, I think if this stock opens up right at resistance, the first move will be for traders to sell, because that’s what resistance is all about, but this is when the battle starts. You’ve got resistance right here, $60.00 is clear up here, that’s not resistance, that’s an even number.
I would suggest doing this, looking at about 59.00, this is the time it should get your attention. By the way, you don’t have to chase this stock because if you don’t already own it, you don’t get to get this part of the move, you don’t make money here, you weren’t long. It sounds kind of silly to say, but you’d be amazed at the number of folks that don’t think about it that way, it’s like, “Oh, the stocks up 4 percent, I’ve got to buy.” No, don’t think about buying it up 4 percent, think about buying it like, where it is relative to resistance. So what you’re really doing in rushing to buy this thing is you’re really just saying, I don’t want to miss out on this part of the move, so I don’t want to miss out on this part of the move, so I would rather risk losing this much money, so I just want to buy, buy, buy. And that’s really the analysis on a stock on a stock like Facebook (NASDAQ:FB ) when it opens up so close to resistance. You think you’re going to make this much money, but you’re risking this much money.
So instead my suggestion would be, wait for the stock to start trading above $59.00. If it does then you know you’ve got a breakout, we’ve got us a breakout, the stock is up, everybody’s a winner, and you’re likely to see some follow-on buying, kind of like you saw with Netflix (NASDAQ:NFLX ), it lasted a day but the stock is still really strong. So again, just kind of wait for Facebook (NASDAQ:FB ) to play itself out at the open, and that could take one minute, it could take fifteen minutes, it probably won’t take that long. Then wait for the stock, watch it, see how it moves, about $59.00. If it keeps going higher from there then you’re buying high, no question about it, but you didn’t buy low. If you did buy low do the same analysis, watch how it trades around here, if it starts rolling back then maybe you to take a little profits too, but wait for the breakout as a sign that the stock is moving higher. Unless that breakout occurs there’s no reason for you to be buying this stock.