We have never been a fan of Facebook's fundamental business model. We have seen hundreds of faddish, super-hyped internet-based companies whose schemes sucked in unwary investors. Our position has always been that this is the most recent example of "much ado about nothing".
When GS bought a sizable stake pre-IPO, we correctly predicted that GS's target would be a doubling of their investment by the IPO date and that they would most likely liquidate enough of their stock during the IPO to effectively break even on their investment. According to subsequent news reports, this is what occurred.
So that brings us to the question of what will GS and other remaining underwriters of the IPO do to wring the maximum from their remaining position. Never underestimate their ability to pump and dump any stock if they truly desire to do so. OTOH, GS and other of the larger firms reportedly have large short position in FB at this time. So like most astute traders, they are playing both ends against the middle. It's a win-win.
The technical aspects of the chart are very clear, it's make or break for FB. If FB can't manage to generate sustained buying at this point, it will confirm our LT analysis that this is, at the most generous possible evaluation, a $6 stock at this point.
Hitting 3 short targets since the IPO is a very loud signal that the market considers this a real stinker. Although there has been one decent counter-trend long trade, it did not reach any technical target. Another loud and clear signal.
We have been LT short since $42 and have only traded on the long side at our identified Long Entry levels for counter-trend trades. Our short position was reduced by 90% when price reached the 3rd target to capture profits. Our basic strategy is always the same, LT trend trading, ST counter-trend trading. Entry only at the levels we previously have identified.
On the chart we have identified two Short Entry levels that will be watched and monitored closely by most who trade this stock. If it can't manage at least a small pullback at this time, target #4 will be reached.
On a positive note, there is always the possibility that some fundamental change will occur in their business model that produces sustainable profit streams from the platform. Possibilities are not something that should be relied on for investing or trading decision, in our opinion.
Trade the chart and trade safe.
Comments
darcy_kincaid
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FB opex position up 1250% so far. Great option action for nimble daytraders and scalpers.
darcy_kincaid
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FB opex position up over 1000% so far today.
darcy_kincaid
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500% total profit so far from taking 1/2 profits and entering opposite as mentioned in last post. Win-win. Another turn around using same method 300% on the next leg up so far. Win-win with right analysis. Original analysis still holds.
darcy_kincaid
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200% profit so far from taking 1/2 profits and entering opposite as mentioned in last post. Win-win. Day still young.
darcy_kincaid
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Our analysis targeted a custom squeeze option play on FB. Up over 700% since close yesterday. Still a real dog, in our opinion. We will take 1/2 of the profits and re-enter same strategy opposite . Win-win situation.
darcy_kincaid
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FB has hit the Higher Probability Short Entry Range and is being sold. Earnings option trade 1200% gain from 3:45 pm yesterday to 9:35 am today..