Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

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
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos