Here’s your trade on Facebook (FB). (February 04, 2019)
I want to look at Facebook ( NASDAQ: FB ) today. This here is to remind me this sucker pulled back like 45 percent from the high; that was a pretty steep pullback. I don’t look at this as a market leader now, not at all. But it is going to be one of those wildly watched stocks, I just think there are better stocks to own if you are just looking to outperform the market. If for whatever reason, Lord knows what it would be, you are a “Facebookian”, then hey, here’s your opportunity, right?
The stock gapped up on earnings and it held; it held the gap. This low here on last Thursday was 165.00. The stock undercut that today a little bit, by a point and a half or something like that, but then it almost immediately turned around. I will be honest with you, I had held some calls for a while and then I sold some; on the earnings date when the stock popped up I liquidated some, I kept a small position and then I set a pretty tight stop last week and then I promptly forgot about it and so I was stopped out first thing this morning.
I currently don’t have a position in Facebook ( NASDAQ: FB ) so I am treating this like a new trade and this is what it would be: The high right now is 171.68; this is where the high is on the stock. I would only really be interested in buying this stock if it broke out above this line on volume. And then if it did, as soon as it did so I would keep about a 5 percent stop, wherever, I would keep it right below 163.62 maybe 163.55, give it a little bit of room.
Your whole reason for buying this; the only reason you are buying this is because you think the stock, once it breaks out above the earnings day enthusiasm high, you think the stock is going to continue to be bought by the FOMO Group, they are going to be rushing to get the stock before it goes up to new highs and Zuckerberg becomes the richest jerk in the world, they are going to be rushing in right away. That’s why you are going to be buying this stock.
If on the other hand the stock breaks out and then flips back what’s that is telling you is that institutions are using this strength in order to sell into it. And if that is the case; institutions are pretty much loaded up on this stock, you do not want to be buying stock from them when they are liquidating. Because I guarantee you, they have held this stock for a long time, 169.00, 180.00, 150.00, they don’t care, if they want out, they want out.
Meanwhile, you are sitting there taking the other side of a very, very heavy trade. You don’t want to do that so you don’t want to stay long IF the stock moves against you. So your entry would be on a breakout ABOVE last Thursday’s intraday high of 171.68. And then once that trade is put on you’ve got about a 5 percent stop on this stock.