Facebook Stock In No Mans Land

Social networking website Facebook Inc (FB) this week celebrates the one-year anniversary of its initial public offering.  On May 18th 2012 the company sold shares to the public at $38 per share, and the time had a valuation larger than Walt Disney (DIS), among other large companies. Fast forward twelve months and the stock trades roughly 30% below its IPO price and more than 40% below its intra-day high print from May 18th 2012.  The stock had more swings than a playground in the first year of trading, yet for those looking at a great entry point for a longer-term position at present doesn’t offer much and in fact stock is in no man’s land.

After sliding lower for the first three and a half months of trading, Facebook Inc (FB) found bottom in early September, which was confirmed with a higher low in October and finally a higher high in November.  The stock then powered higher along with the rest of the market, rallying 32% from November 26th until it found horizontal resistance on January 28th near $32.50, which acted as an area of resistance in May and June, and still does to this day.

The other key lateral level to watch lies around the $24.50 mark (red dotted line), which acted as resistance until the November 28th breakout, and ever since turned into support.  In late March the stock tested the $24.50 area, from which it proceeded to bounce.  The bounce however has been sloppy and choppy, yet did manage to define a new pattern on the chart: a down-trending channel (blue parallel lines), which in this case may be defined as a bull flag.  If you are unfamiliar with the pattern, this type of formation usually resolves to the upside.  Either way and anyway, the bottom line is that as mentioned above, the stock currently sits in no mans land and to yours truly a real long-side entry likely wouldn’t be interesting at this point unless the stock can close above the early May reaction highs near $29, and thus on a break out of the bull flag formation.


FB 12 month chart




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