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 InvestorPlace Feb 12, 2013 1:28PM

Woman with laptop copyright Noel Hendrickson, Digital Vision, Getty ImagesBy Serge Berger


iplogoFor 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.


Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.


More from InvestorPlace

28Comments
Feb 12, 2013 3:15PM
avatar
why the hell would anyone, on purpose, put up their lives on some stupid social media sight so any maniac or ex, can find you and keep track of you and most of all let big brother find you if necessary?? is the nature of humanity this pathetic now???? frightening isn't it, not to mention ID theft rampant on sites like these, viruses to, insane! any rational person, unless he has a business to promote, would keep his or her personal life OFF any site like this, of course 'rational' person seems like an extinct species more and more.
Feb 12, 2013 3:22PM
avatar
I have a little secret for you...Facebook is becoming more and more unpopular with kids.  Seems Instagram is the in thing.  People becoming tired of posting because its the same ole thing.  Buyer beware....
Feb 12, 2013 4:36PM
avatar
Facebook is ruining my marriage.  My wife is addicted to "stalking" all her "Friends?"  Hours and hours a day, head bowed, finger wagging through the pages.  I rue the day she got a smartphone and I HATE facebook.
Feb 12, 2013 3:32PM
avatar
The facebook model has morphed into a simple marketing ploy.  Come join us while we pick out all the personal aspects of your life as well as your contacts so we can better direct our marketing program to fit our needs and we can sell your info to others at a profit for us.   Only naive people or people with no regard for their personal and private information would knowingly contribute to the Facebook program.  It is just the same old something for nothing game.  Wait, come join Facebook and win a free car.
Feb 12, 2013 3:47PM
avatar
Facebook is a cancer that must be eradicated...
Feb 12, 2013 3:04PM
avatar
big privacy thief's !!!more scam and lies and corruption from facebook he sold more then 1 billion shares to friends and private bankers before it was on the real share market other people go to jail for it !!! the keep there likes, and fig up with bots still and all in court for it !!! people must be blind?? its not a company !!! the don't have value the try to sell tin air ?!!!!
Feb 12, 2013 3:52PM
avatar

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!

Feb 12, 2013 5:03PM
avatar
Well, in spite of all the gibberish, the plain fact is that Facebook doesn't produce anything but talk.  All it takes is for some other college geek to come up with another idea for the fickle fans of Facebook and it becomes another Myspace in about a day.
Feb 12, 2013 3:24PM
avatar
this sh*t would have to be free for me to own it.
Feb 12, 2013 4:24PM
avatar
I suspect there will be a "next big thing" social media website, and FB will become MySpace 2.0
Feb 12, 2013 6:58PM
avatar

facebook is a waste of time and money...

they should Not be trusted with your personal info..

Feb 12, 2013 8:38PM
avatar
It's a cheap (FREE) way to stay in contact with friends, only becomes stupid if you get addicted to it!
Feb 12, 2013 5:47PM
avatar
Technical analysis charts aren't exactly astrological charts. But lordy, they're close. It should be obvious that no technical analysis makes anyone much money, consistently, as the years go bye bye. If it did, Warren Buffet would be their houseboy.
avatar
Serge, apparently with an iron in the facebook fire...
Feb 12, 2013 5:16PM
avatar
All this stuff with social medias is dying out other than same welfare types that watch reality TV shows....Who said the 47%?  Yeah, I am making light of it.  Unfortunately, it is the truth.  They do not work and will not, period..until the entitlement checks stop.  That will not happen with this current administration and he will tell you that tonight.  The Pooper is about to poop all over himself tonight.  Mark it!  The FED will continue to print more money and infuse the markets.....it is just going to one heck of an inflationary ride.  Saddle up!
Feb 12, 2013 6:22PM
avatar
I think Facebook is super fun.  I love posting pics of my dinner, and liking my favorite toilet paper and the Aflac duck.  I have over 700 friends, and some of them I even met in real life once.  Oh, and I just looked up my old BFF Megan who I haven't talked to since 2003, and she is so fat now...  
Feb 12, 2013 4:06PM
avatar

"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!

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. 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 Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
284
284 rated 2
461
461 rated 3
671
671 rated 4
628
628 rated 5
618
618 rated 6
615
615 rated 7
495
495 rated 8
347
347 rated 9
115
115 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
DYNDYNEGY Inc10
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

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.