Is it too late to unlike Facebook (FB)? (August 14, 2019)

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We had a heck of a sell-off today in the market. One stock that I thought was interesting was Facebook ( NASDAQ: FB ) and here’s why: The stock had broken down below the 50-day moving average, and you say, “
Well, that’s it for that,” and then it immediately rebounded and tested this 50-day moving average.

When a stock does this a healthy stock is going to push back above the 50. Facebook ( NASDAQ: FB ) didn’t do that and here was your first clue, this is what I call a shot across the bow. Where the stock falls below the 50, big volume and then wham, it reverses and actually moves up to a new high, which kind of lulls traders to sleep; because they say, “Whew, that was a close one but I guess we are all good, guess it’s all good.”

Well, it’s not all good. When a stock sells off 50 thousand shares in a day, that’s institutional distribution. People aren’t buying they’re selling. The stock runs up here, hits a new high and then falls back down, comes up to test the 50 and is now down again. So I look at this, over the last week or so, I look at this as a key development in Facebook ( NASDAQ: FB ); to where now I am seeing the 50-day moving average once again violated, like it was here, and then rallied quickly up to here like it did right here. It pulls back a little bit and then runs this way.

Where as this, hopefully, wouldn’t it be nice if get an identical pattern, runs up a bit tomorrow, only then instead of running that way, falls over, like that. I would be very leery of buying Facebook ( NASDAQ: FB ) now. In fact, frankly, there is no dang way I would buy Facebook ( NASDAQ: FB ). I would hope for the stock to run up into the mid 180.00s and then frankly, I think it would be a really good short. I think it could pay you off here. After a big 4, almost a 5 percent sell-off today we could get a little rebound tomorrow.

This would be my bias, I would decide, the stock is below the 50-day moving average, right here, it is below the 50-day moving average. The 50-day moving average is now actually the top of the box. That’s different than when it was trading up here above the 50-day moving average. It is a totally different configuration so you have to treat it the same way.

If you love Facebook ( NASDAQ: FB ) that’s fine for you. You and like 19 billion others who love giving Mark Zuckerberg all your stuff but don’t look at the stock in the same way. This is a very weak stock and you want to stay away from it. I will say it again, if it rallies a bit and stalls out I think it is shortable; that’s what I think.

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