About FB

Yesterday before earnings, I made clear two things, 1) I do like FB but at a certain price and it needs to have the support we have seen that have given us two great long trades while everyone else hated FB. The second was I would not be holding FB in to earnings. You may recall the earnings last night were not bad at all, but it's not about what you did, it's about what sentiment toward your future is.

Today FB is down around 3%. I'm trying to decide whether or not I would take FB on as a short position, I think it's not so much a matter of my opinion right now as it is the way the chart develops and whether or not it has a sufficiently high enough expectation of profits with low risk. At this moment I'd say no, that is not saying I think FB will be fine, that is saying there's a probability for lower prices, it just as of yet has not met my standard for a trade, but there's enough promise to keep an eye on it.

I'll show you where we are and where we need to be.

 This is a simple reason as to why I wouldn't hold FB in to earnings long.

 Here is the second base we found in FB, the first one we traded long was when EVERYONE hated FB soon after the IPO. I still believe this base offers more long term upside. Note the recent head fake move above resistance as well

 Here's the head fake move, this morning the stops were run so someone bought some FB cheap and will likely try to make a profit on the upside.

 I'd have a very hard time being short FB without the trend channel breaking, this is one of the main challenges. On the other hand if FB can consolidate, accumulate and hold the channel on a CLOSING basis, I might call this a new long.

 So far there seems to be distribution in to today's move higher in to the gap.

 This 5 min chart would also need to turn down significantly, hopefully with FB price higher (as a short trade).

 The 60 min chart has some work to do to recover, all longs should have been out by this first major divergence in red (around price), there's simply no reason to risk it with those odds against you.

Ultimately since there's so much damage on the 60 min chart, I'd be prepared most likely to call FB a short if the charts from 5 to 15 min can go clearly negative and hopefully in to higher prices.

We will also watch FB for any signs of improvement and as a long. I don't care which way we trade it, as long as we are on the right side of the trade. For those that made money on the long trade and I know there are quite a few as we went through that base accumulating at low levels, congratulations, you see that patience pays.