Five percent selloff on Facebook (FB)…with over 77 million shares traded? Here’s your trade on that fiasco. (January 12, 2018)


Today we are going to look at Facebook ( NASDAQ: FB ); speaking of a lot of money. The stock gapped down and could not get back up off the floor on Friday because apparently they are changing their news feed around and that might impact their revenue and their earnings so that is not good What was interesting to me is the stock gapped down to $178.00. That is a pretty big gap, over 5 percent for Facebook ( NASDAQ: FB ) you have got to UnLike that thing. It gaps down here but then it couldn’t get even back up to the 50-day moving average; look at the massive volume.

So is this the end of the road for Facebook ( NASDAQ: FB )? I say, wait for it, no and this is why: This stock has gapped down and sold off all the time and the stock just keeps on continuing to run. Every pullback, every big move like this has turned out to be a buying opportunity. So, when you look at this stock, right here, with this massive volume, 77 million shares traded, 77 million, that is a lot of million. When you see this kind of volume, this is a total shakeout, total shakeout. You actually have a pretty good trading opportunity to make some money.

Here is how you do it: First of all, the low was 177.40. Let’s say we buy this stock on Tuesday. You might want to buy it on Monday but the market is closed so you can’t. Wait until Tuesday; 177.40 is the low. You are buying the stock, wherever it is, you are putting your stop at 177.38, just right below this Friday’s intraday low (I will come back to that in a second). Then you buy the stock. Then when the stock moves back above 181.48, we will say 181.50, then you buy more. That will be a really good trade for you because I think people are going to be coming back into Facebook ( NASDAQ: FB ) because that is what they always do.

Also, I said I would be coming to this entry and stop, you could very well see, it just depends on what market is doing on Tuesday, you could see even the stock trade lower than Friday’s intraday low, so you have to take that into account. If the stock, for whatever reason, gaps down below this level avoid it; don’t buy it until it comes back above.

In other words, what we are looking for is, we want evidence that this big shakeout has been THE big shakeout and that’s going to move higher. If it gaps down a bit you know that there is still selling, don’t buy it here, buy it here. Wait for it to start moving up. We need to see some positive action in this stock on Tuesday in order to buy it. I think this is going to be a pretty good trade. One of the best parts about this trade is it is low-risk because you can put a stop very, very close to your entry point; way less than 2 percent.

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