iBankCoin
Joined Jan 27, 2008
7,184 Blog Posts

Trade Of The Week: $FB Facebook

I’ve been watching this setup in Facebook develop over the last month and it looks like a move may be imminent for the stock. I recently took a position after their recent earnings announcement, which actually saw growth in user engagement, and overall a solid report. See my Exodus screen shot below for details on buy:

The stock is so hated on Wall Street due to privacy concerns along with potential government regulation, that nothing seems to move the needle. It also doesn’t help that Zukerberg has been unloading his shares here, but can you blame him? He is not a trader, and he has his own planned agenda, but it has not been a positive for the stock. You can hear the frustration in traders, on Twitter, on how the stock has been stuck in a range for months on end. Well, I think that changes this week, or at least has the potential to change.

Nothing in certain in this game of trading and investing, so never put your eggs all in on any particular stock. But, the current price action gives us a favorable risk/reward, one that I have no problem taking.

We were very close to a breakout in the stock on Friday, but option expiration seemed to play a hand in keeping a lid on the stock at $195. That’s ok, the stock now gives us a clear entry should we see a move above Friday’s high. The daily chart also show us an action point should price get above the declining trendline, see chart below:

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Should the stock reverse here at the upper trend, the trade could be busted, and Zuckerberg wins in selling his shares up here. Indeed, Thursday’s low now becomes the crucial area to defend. If price falls below $191.45, I’ll be out with a small gain in my common shares.

If we see volume with a strong move Monday, I’ll likely add some short dated options. A big trade is developing here…

Keep it on watch.

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