{"id":14392,"date":"2012-09-25T02:03:17","date_gmt":"2012-09-25T09:03:17","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=14392"},"modified":"2012-09-25T02:03:34","modified_gmt":"2012-09-25T09:03:34","slug":"facebook-momentum-ends","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/09\/25\/facebook-momentum-ends\/","title":{"rendered":"Facebook’s Fragile Upward Momentum Ends In One Day"},"content":{"rendered":"

It had to be too good to be true – Facebook (FB) CEO Mark Zuckerberg able to “motivate” his stock upward and out from the ashes of a post-IPO disaster. On Monday, September 25th, FB got hit by a bearish Barron’s article pegging Facebook’s value at $15\/share<\/a>. The stock subsequently crumbled under the pressure to the tune of a 9.1% loss and erased all of the momentum and most of the gains from the “Zuckerberg bounce” from his appearance at TechCrunch Dsirupt on September 11<\/a>. Apparently, things might have gotten worse if circuit breakers had not kicked in to halt short-selling once the stock had lost 10% on the day. New short sales are banned until Wednesday (see “Facebook\u2019s Slump Triggers Short-Sale Restriction<\/a>“).<\/p>\n

The technical set-up was ideal for shorts right from the open, and I automatically entered one myself. The stock not only broke its recent uptrend and momentum from all-time lows on September 4th, but it also started the day just below support from the 50-day moving average. <\/p>\n


\n
\"Facebook's<\/a>
Facebook's momentum ends with an exclamation mark<\/figcaption><\/figure>
\nSource: FreeStockCharts.com<\/a><\/strong>
\n<\/center><\/p>\n

Note in the chart the horizontal line that marks the high of the day that insiders dumped millions of shares onto the market. That selling sent FB to new all-time lows at the time. The Zuckerberg bounce conveniently popped the stock just over this line. Monday’s sell-off conveniently ended right at this line. (You just can’t make this stuff up!). I think this behavior indicates traders should expect price levels around lock-up expirations to act as magnets\/repellants.<\/p>\n

FB now faces a critical technical test. The gap from the Zuckerberg bounce now seems sure to fill, and further selling should quickly send FB to fresh all-time lows. A revival to $24 should restart the positive momentum and position FB to fill the ugly gap down from its first earnings call as a company. I think the upside scenario is very unlikely in the near-term.<\/p>\n

I closed out my short position once FB got over a 9% loss, not even realizing that the stock was heading toward a circuit breaker. I just did not believe the stock could lose 10% or more in a day. Closing out that position leaves me net long FB again…and leaves me wondering how\/why I ever got into this drama. I have still not summoned the energy to write my mea culpa on FB as one of my worst stock trading\/investing decisions of the year (my last defense of FB is here from June 10th: “Reuters Facebook Poll Fashioned to Feed the Fear<\/a>“). Meanwhile, I am trading around the mess using great technical setups like today’s.<\/p>\n

Be careful out there!<\/p>\n

Full disclosure: long FB<\/p>\n","protected":false},"excerpt":{"rendered":"

It had to be too good to be true – Facebook (FB) CEO Mark Zuckerberg able to “motivate” his stock upward and out from the ashes of a post-IPO disaster. On Monday, September 25th, FB got hit by a bearish Barron’s article pegging Facebook’s value at $15\/share. The stock subsequently crumbled under the pressure to … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[483,599,62],"tags":[549,943,1597],"class_list":["post-14392","post","type-post","status-publish","format-standard","hentry","category-breakdown","category-internet","category-technical-analysis","tag-facebook","tag-fb","tag-technical-analysis"],"yoast_head":"\nFacebook's Fragile Upward Momentum Ends In One Day - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/09\/25\/facebook-momentum-ends\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Facebook's Fragile Upward Momentum Ends In One Day - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"It had to be too good to be true – Facebook (FB) CEO Mark Zuckerberg able to “motivate” his stock upward and out from the ashes of a post-IPO disaster. 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