Facebook stock is at a critical level
Now that the social network is no longer front-page news every day, investors can act on technical signals rather than emotions.
By Serge Berger
For some time, I stayed away from social media giant Facebook (FB) because it was involved in a media blizzard and was simply too laden with emotions for my liking.
However, now that the company is no longer making front-page headlines on a daily basis, has some trading history and has arrived at an interesting technical level on the chart, I am warming up to the idea of swing-trading the stock.
After Facebook cratered just about 60% in price for the first three-and-a-half months of trading, the autumn winds ironically allowed the stock to slowly stabilize. By the second half of November, FB had established a solid floor around the $18 to $19 area, a higher low versus the summer lows, which set the stock up for better technical behavior through late January 2013.
Just like the late summer 2012 lows act as good support, the zone between $32.50 (January 2013 highs) and $33.50 (June 2012 highs) acts as meaningful resistance (until broken, of course). This resistance area also formed just north of the 50% retracement line of the entire move from the IPO-day high down to the September lows, thus further confirming the area's significance.
While the January high at $32.50 is the level to breach on the upside, in the nearer-term, Facebook stock has found lateral support at the $28 mark, which acted as resistance in December. We need to see a meaningful reversal day to the upside if the stock wants to bounce here, and should $28 break, the next lower support I would look for would be between $24 and $25.50.
This area also happens to represent a so-called confluence zone of support, as lateral support coincides with an area between the 50% and 61.8% Fibonacci retracement of the swing higher from the November lows.
The $24 area should hold as final support if the stock wants to eventually try another higher-probability run toward (and potentially past) the late-January resistance zone. Any break below $24 would cancel the bullishness of the late 2012 rally and require re-evaluation of the chart.
More from InvestorPlace
AHH BUMMER< NOT
FB is one the most ignorant businesses that have ever made it to the SEC.
It is a gossip business without any privacy.
Sure it is a nice way to say hi to old and new friends, but is this what makes a biz a biz!
DO I find it a valuable asset, not at all. In fact far from; as it reminds me of a bunch of little kids trying to be an adult without having any clue what it takes!
facebook is a waste of time and money...
they should Not be trusted with your personal info..
"Facebook is a cancer that must be eradicated",.....
Right after the eradication of all the Republicans, Libertarians and Teabaggers, who are the biggest cancers of all,
The sooner the better!
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
This North American food and drug retail giant is showing signs of sluggish growth.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.