I'm going to go ahead and open a FB core short or a trend short. A couple of weeks back I said I'd be watching FB and I have been, there's an intraday chance for a little better entry, but judging on the weight of the charts, I'm not going to scrap over loose change.
The funny thing is when FB came out it was called, "The most hated stock", I believe we were the first ones to trade it long after that opening IPO debacle between GS and MS, we also caught FB at the very lows and made from 30-300% on the position, some of us used options with it. We got involved a few other times and got out at exactly the right time, but it has been a while.
I'll be opening the position after I post this in the core model portfolio and this is why I'm taking on FB (other than their clicks scandal).
This is a 5-day chart, I encourage you to always look at multi day and even multi week/quarterly charts, they can depict changes in character that a daily chart would never show.
If you look close at the last 3 weekly bars we have a big loss of momentum from a strong up candle to a Star to a Bearish Shooting Star Reversal Candle this week.
I said before that candlestick reversal formations don't really give us targets, but used in this manner (multi-day chart), you can count on there being a reversal that will show up on at least a multi-day chart.
The daily 3C chart shows the first positive divegrence we followed long before anyone liked FB, it was literally called, "The Most Hated Stock", so when we went long at a new low, it was a bit difficult for some, but we had excellent signals and the trade lasted (the first one) until the area where the white arrow stops.
The current 3C daily divegrence is leading negative in a big way and it is reflected on the longer minute charts.
Here's a 2 hour chart, unfortunately that's all the history I can gather which is quite a bit, but you can clearly see FB being at it's or near its high is not seeing the same thing from 3C, 3C is nowhere near confirming by being at a new high. Furthermore, since the area where the Trend Channel broke, there's a clear negative leading divergence seen on almost every chart in the same area.
This 60 min chart is an excellent example of what I'm talking about, leading negative. That recent acquisition sent FB up higher, I can only speculate that it's not only priced in, but this "Likes" and clicks controversy is going to be very hard to wash themselves clean of.
The 30 min chart shows the same trend at the same pivot where the Trend Channel breaks.
We see the EXACT same thing on a 15 min chart, I'd almost be suspicious if these weren't all so consistent in where they start and how strong they are.
A 10 min chart has more detail, it shows a positive divegrence that's not strong enough to make it to longer charts and it shows the result of that positive divegrence, it may have been a leak way back then as farm as their recent acquisition. In any case, 3C is still in leading negative position.
The 5 min chart about since the time I said I'd really start paying attention to FB, another very clear leading negative divegrence or distribution.
The scale of distribution appears to be larger than almost any other equity/asset I've seen.
The 3 min chart...
The 2 min chart makes the timing look a lot better.
On the 1 min it may see a little better entry, but given the weight of the evidence, I'm going to enter now.
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