FB Update

On 8/3 we had a slight positive divergence (enough for some members to make money with calls), but I warned not to expect much from it. I also said that my feeling was FB would spend time carving out a larger base that could support a bigger move, likely bigger than our long trade at the start of June.

Last week, although everything looked consistent with a base and a move coming off a head fake move below a descending wedge, I also warned and hoped to that we'd see a pullback shortly in FB, we have seen that pullback start last week, this is where we can gather information as to what i happening under the surface of price.

I'm not convinced FB is done, but I do like what I see.

 Last week we had a head fake move below a descending wedge in yellow, that (as is usually the case) was our reversal area. As the week developed FB approached several resistance areas, first the wedge breakout area and second price resistance, at this point I WANT to see a constructive pullback, I want to see the stock gather a head of steam and push through on a fresh run rather than an extended run.


 If you just look at the relative positive divergence on a 5 min chart at the head fake move and what FB did after that, then the leading positive in to the pullback/consolidation is very impressive. I showed you the daily chart last week which is just getting enough data to give a signal as FB is a new issue, it was positive.

And the 4 hour chart with the relative negative sending FB lower (recall I had already been out of the long position and was waiting for the next set up), here we see the 4 hour chart in a leading positive position which started at the head fake move below the wedge. It is currently leading. If I were interested in a new FB position or adding to an existing one, I would be a bit more patient, but I think it is close enough to consider a phased in entry of 1/3rds or so.