Over the past week, we have seen a -.58% drop in FB price. Also, today's change of .20% (as of Tuesday, May 16th at 12:32pm) suggests that FB has begun the process of market correction. After April 17th and until May 1st FB posted an enormous run-up in stock price, many outside events triggered this run, however, in this run we see two gap ups in stock price, one on April 24th and one on the 28th. The one on April 28th has especially lead to an over inflation in share price creating a fake support line highlighted in orange. While long-term FB is more than likely to surpass current share value, Yahoo Finance also reported that FB missed earnings estimates (1.12est. vs 1.04act). This miss in earnings which has not been properly reflected in share price, along with over inflation of share price suggests that the current price of $149.71 is not sustainable.
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Additional factors that suggest large market correction is before the large gap up on April 28th, FB's previous resistance level hovered around $147.10-$147.74. It is also important to note that this resistance range is still significantly above its 2-month trending resistance level of $146.20. In order for FB to once again reach "stable market value" it would need to correct to around $147.40, over a $2 drop at current price. Shorting FB ahead of its large correction will pay off within the coming weeks.
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And the correction came in, hope those that agreed with this had a position waiting because we are seeing $$$$ today!
Dude A correction is always possible but your thesis of missed earnings is misguided to say the least. In addition you are shorting the strongest consistent revenue growth stock currently at the most reasonable recent price. Be careful.
xdizzy98
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@Risky-Business, Shorting it short-term versus long term is very different. As you said a correction is always possible, and based on certain things I have looked at it looks very likely within the next couple of weeks. I am not saying that FB will no longer post strong growth, I am just highlighting an opportunity for those short term traders out there that are interested in possibly a good short position
Risky-Business
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@xdizzy98, A short term pullback is always possible that being said I'm looking at a bull flag over here. If the market pulls above 2400 FB will go higher. If the market cracks you'll get a pull back. Whatever the broader market does...
Risky-Business
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@xdizzy98, Also I have been trading since 1989 and I have found that : 1 - trading short term you wind up losing if you consistently trade short term. And 2 - shorting is extremely difficult as the timing must be right on the money. You need TWO great trades perfectly timed to successfully short. A difficult proposition to say the least. Now you are shorting one of the strongest revenue growth stocks available to make it most difficult. It can be done but it will be extremely difficult. Good luck!
xdizzy98
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@Risky-Business, it was done I succeeded and bought calls at the bottom! Next!