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A Closer Look at Facebook Stock


Recapping IPO and post-IPO action.

Investing can be a tricky business. Whether Facebook (FB) has hit "bottom" or not is besides the point here. As Facebook was hitting teenage levels, negative sentiment was soaring. And the stock price was falling against it… too far, too fast.

Let's recap the IPO and post-IPO action. After a first day run-up, the stock fell from 45 to 25, then rose to 33 and fell again to 17 and change. The latest fall took about two months, and dinged "value" as the stock dipped under 19, even if short term in nature. Clearly, this is coming from a Monday morning quarterback perspective, but it's important to understand what set fire to Facebook stock. This is a good thing for all investors to do - pattern recognition and analysis overview assists us in identifying other investment opportunities.

For starters Facebook's stock slipped down near, and briefly under, $19.00 per share, the 50% Fibonacci level of its IPO. Additionally, the RSI bottomed when the stock cratered for the first time near 19, then posted a higher low on the RSI when the stock hit a new low.

So what should we watch for here? Well, Facebook is at initial resistance of 22. Next area is edge of gap fill around 24. Note gap fill may serve as a magnet. On the support side, watch the lower open gap starting at 20, followed by 19.

Trade safe, trade disciplined.


Editor's Note: Andrew Nyquist is an independent investor based in the Minneapolis area. This article originally appeared on his investing and economics site, See It Market.

Twitter: @andrewnyquist
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No positions in stocks mentioned.

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