Is this the right time to buy Facebook (FB)? (July 07, 2017)


I want to look at Facebook ( NASDAQ:FB ) this weekend, here is why: You can see, I have drawn these lines, the stock has been in a channel that first started in April. Since that time it really has been oscillating; the extreme low would be 145.00 to 155.00, so in this 6 or 7 percent range. Now, the company reports earnings later this month, in about 20-days, almost exactly 20-days, give or take.

Here is the thing, Facebook ( NASDAQ:FB ) is still growing strong, and frankly, anytime anybody has bet against it, from a trading standpoint, they have kind of had their head handed to them. So I want you to be long this stock. The question really is, how exactly are you going to make that trade? You can see on the weekly chart it is on a really strong uptrend. I think this consolidation is pretty healthy. If you are interested in owning Facebook ( NASDAQ:FB ) I wouldn’t wait until after they report earnings to own the stock. The reason is, lets say earnings are good and the stock pops to a new high. Now you are getting in, while a lot of the patient folks who have been owning this stock for a while, are going to be lightening up on some of their stock.

On the other hand, you are buying a bunch now and if the company disappoints, suddenly the stock is down at 135.00 and you are thinking, “Okay, well should I buy more?” What I am suggesting is, you kind of split the difference. Don’t buy Facebook ( NASDAQ:FB ) if you don’t think the stock is going to move higher. Don’t buy Facebook ( NASDAQ:FB ) if you just feel like plunging, don’t do that.

What I am saying is, craft a trading plan. Ideally, the stock would be back down here closer to this 146.00 or 147.00 level. Ideally it would be down around here. You buy a small bit of stock, the idea is, as long as the stock stays above this level here, you are good. Kind of the lower the better, and I am talking about before earnings, because I expect the stock to stay in this range until earnings are released. There is no reason for anybody to get aggressive buying or selling it, sit will probably stay sideways for a bit. But watch it. If the stock falls back that is when a good time would be to actually buy the stock again, with a stop here. And then if the stock starts to run-up, I would even take a little bit more, even if it is before earnings.

The reason you are able to take a little bit more is because you have already got a profit in the stock; you are not here at a full position, you don’t want to do that. Actually you are kind of trying to cheat on the stock. You are trying to get a little bit of a head start and you do that by going in slow. A little bit here, a little bit here. And then, frankly, if the stock does pop, ask me then what you are supposed to do. I am just trying to get us in before the stock actually does move higher. In a way that is conservative enough to where if the stock moves lower it is a losing trade but it is not a disaster. So we will kind of scale into this slowly over the next few weeks, and hopefully we will have a low enough cost basis to where we can comfortably hold this stock over until earnings.

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