Think Facebook (FB) is done going up? Here’s my take on Facebook (FB) and Snapchat (SNAP). (July 12, 2017)
I want to look at Facebook ( NASDAQ:FB ) and Snapchat ( NYSE:SNAP ) today. We are going to start with Facebook ( NASDAQ:FB ); these are just pivot points that I have on my chart, kind of giving us various levels. Here is really what I want you to see: This is a stock that had been trending sideways, it is Facebook ( NASDAQ:FB ), it is one of the strongest ones. This has been trending sideways in about a 10 point range, not quite that wide, really about an 8 point range, since late April. Buy at the low, sell at the high has worked pretty well all the way up until today when the stock broke out; it broke out on volume. That is a big deal.
Lets look at the weekly chart. You can see what is really happening.. You can see that the stock is just continuing to move higher; it has been forever. Here is the thing, don’t bet against Facebook ( NASDAQ:FB ) just like I would tell you not to bet against NVIDIA ( NASDAQ:NVDA ). Some stocks are just always going to be under accumulation and until further notice, and don’t expect notice anytime soon, Facebook ( NASDAQ:FB ) is just going to keep moving higher. I actually went long, just in terms of call options, so I could definitely know what my downside is. I went long some Facebook ( NASDAQ:FB ) calls just today. I expect the stock, on any kind of pullbacks here, to find support in the mid 150.00s.
Here is what I think, Snapchat ( NYSE:SNAP ) is on it’s way to being a nice, probably a fairly large hat size stock. It broke down below it’s IPO level, and you know that the institutions are protecting that because they are the scumbags that dumped this pig on everybody. If you are one of those guys with a Robin Hood account, that you opened up just for Snapchat ( NYSE:SNAP ), because you have heard all these wonderful things by JP Morgan ( NYSE:JPM ) and Morgan Stanley ( NYSE:MS ), and whatever. That is all fine and dandy, but if you liked it at 17.00 you have got to love it at 15.00, and you will probably REALLY love it at 13.00.
Here is what I see, think about this in terms of asset allocation for large traders. When Snapchat ( NYSE:SNAP ) came out, if anything, they would be selling other social media stocks so that they don’t get too overweight if they are buying Snapchat ( NYSE:SNAP ). So it is like, lets ditch Facebook ( NASDAQ:FB ) or lets ditch one of the others to buy Snapchat ( NYSE:SNAP ), and so now you are seeing a reversal of this. But here is the other thing that to me is really interesting: This company came out, went public on March 2nd, so lets just say the 2nd through the 6th was big trading, lots of money coming in, well not so much on day 3, but lots of money coming into Snapchat ( NYSE:SNAP ).
Lets look and see what Facebook ( NASDAQ:FB ) did during that same period of time. Basically nothing, it just kept going up. And so I look at this as actually one of those signs of strength and commitment that Facebook ( NASDAQ:FB ) has, where money is just not really leaving this stock. So if you want to make a pairs trade short Snapchat ( NYSE:SNAP ) and buy Facebook ( NASDAQ:FB ). That is not really my deal, I am just a directional guy, keep it simple. With Snapchat ( NYSE:SNAP ) I will probably never be long this stock unless it is to cover my short and I am not short this stock. It scares me because a lot of people are getting hosed on this deal and Wall Street doesn’t like that when it is so obvious.
When you think about it, Facebook ( NASDAQ:FB ) is your guy. Facebook ( NASDAQ:FB ) is your stock. For one thing, and think about this, a lot of people have been saying this other than me: There is absolutely nothing propriety about anything that Snapchat ( NYSE:SNAP ) has. If I recall correctly, I am a little bit older but I know kids, this basically started out as a sexting app that disappeared after a certain amount of time. Okay, big deal. Now you can put mustaches and dog ears and all kinds of stuff on your photos. You can to that too on Facebook ( NASDAQ:FB ) and a whole bunch more. So don’t bet against Zuckerberg, be long Facebook ( NASDAQ:FB ). Know that they report earnings in a couple weeks, 14-days to be exact, and the stock could do anything there.
I will tell you this, if, for whatever reason, the stock sells-off because the market expected more from earnings, that is a buying opportunity. The stock is up at an all-time high now, which means, when you think about it, every pullback has been a buying opportunity, every single one. If it does pullback after earnings you want to buy it. But I think you have got to be long Facebook ( NASDAQ:FB ) going into earnings.