Facebook, Back At Its IPO Price

The last time I penned my thoughts on Facebook Inc (FB) it was May 17th and the stock was trading around the $26th dollar mark.  That day I titled my technical note ‘Facebook Stock Is In No-Man’s Land’ (http://investorplace.com/2013/05/facebook-stock-is-in-no-mans-land/) as the stock continued to trade well within the confines of a bull-flag type formation.  I further noted that I wouldn’t turn decidedly bullish on the stock until such time that it manages to hurdle itself above the $29.00 area, which marks the May reaction highs and resistance dating back to February.

Fast forward to present day, and after the monster post earnings rally in Facebook Inc (FB) yesterday (Tuesday July 31) the stock came within four pennies of revisiting its IPO price of $38.00, which it last saw on the first day of trading on May 18th 2012.

Speaking of last week’s post earnings rally, note that in one day, the stock blasted out of its almost seven month long bull flag formation, cleanly jumped over the $29 area resistance area, and even managed to surpass its next lateral resistance area around the $33 area.  In other words, it was one heck of a breakaway gap.  Such powerful moves often have a few more days of upside momentum before they need to take a near-term breather, and that is also what I now see in store for Facebook Inc (FB).  In other words, the post earnings rally now amounts to more than a 40% move, and from where I stand that’s not something I want to chase.  While the breakaway gap was powerful and should be respected through the eyes of a medium-term time-frame, in the near-term I believe those looking to leg into a long-side position in this name will get marginally better levels in coming days/weeks.

Last but not least, is it conceivable that with the stock price now back to the IPO level, that some investors are looking to unload shares here, regardless of flat performance?  Just some food for thought.






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