FB Update

FB was one of the first alerts that went off this morning and it's an interesting chart so it's worth a look.

As you know my longer term perspective on FB is bullish, I believe FB is carving out a base and as you also know, my shorter term perspective on FB is that it needs to (not my opinion, but interpretation of the charts) pullback and gather some energy before trying to make a real stage 2 breakout.

Finally what we all know about FB if you have been in any of our FB trades is the FB has an uncanny ability to move totally opposite the market and I suspect that is because there's still a lot of control exerted by the IPO writers, GS and MS. FB was an important IPO in a time when IPO business is slowing to a trickle-remember when it use to be IPO Monday every Monday? GS and MS can't be seen to have let FB fail.

In any case, the move today looks like a short term move, the accumulation for which was put together yesterday and we are seeing a move from that today. I highly doubt this move has any legs at this point. While the 1 day accumulation was impressive, it was still only a day and there's still a lot of work to be done on the charts when we move away from a 1-day view only and look at the bigger picture, but it's still an interesting example-one in which I would not have taken as a trade, the probabilities are simply not good enough based on a single day.

The charts...

 You'll see the same pattern over and over on these different timeframe FB charts. I talk a lot about a head fake move or false breakout/breakdown preceding a reversal and we know it's false because 3C doesn't confirm it so you'll see that to the left at the yellow area on a new local high with a 3C negative divergence on this 2 min. chart. Then another concept is that of the "boring" flat range that I often equate to, "The kids being a little too quiet in the next room", you know something is up and that is where we often see divergences, both positive and negative. To the right, yesterday we had that flat price range with a positive divergence in to it setting up the accumulation of shares that will be sold today in to higher prices.

 On a 3 min chart, the same thing, the head fake and then downside reversal as that attempted breakout fails, the flat price range yesterday with a positive divergence and we also have the principle of migration of the divergence from the short charts like 2 min to the longer charts such as this 3 min and beyond.

 The 5 min again with the head fake move at the yellow arrow on a negative divergence, the flat range with accumulation and thus far an in line status intraday so the selling pressure isn't too heavy yet.

 Even a 10 min chart with all of the exact same components

 Amazingly we even see a 15 min chart move in to a 1 day positive divergence which is quite quick so it appears institutional money was pretty active in accumulating a decent size position in the time they had.

 The big picture in FB well beyond today's move on this 30 min chart shows a decent trend with confirmation, it's the shorter timeframes that need a pullback and need some work to show accumulation and a positive divergence before I'd add to FB long.

Now, the complete picture, take any of those positive divergences above and zoom out beyond the intraday trade signals for the last 2 days and they are all still in a leading negative position, this is why I say I doubt very much the FB move today will have any legs, in addition to the fact that you can only accumulate a small position in a single day, it may be quite large for a single day being it hit the 15 min charts, but it's still a single day. FB likely needs a week or so to really pull itself together.

This is the same 2 min chart as above, just in the trend view, just about all of those positive timeframes have some version of this negative trend, this is what needs to be repaired for the longer term FB trade we are looking at.