Today's chart is of
), which operates as a social networking company worldwide. The
company builds tools that enable users to connect, share, discover,
and communicate with each other; it enables developers to build
social applications on Facebook or to integrate their websites with
Facebook; and it offers products that enable advertisers and
marketers to engage with its users.
What I'm looking at:
- Strongly outperforming broader market, up 101% year-over-year
and 45% year-to-date.
- Possible stall or reversal between current level and round
number $40 level, which represents 50% YTD level.
- Average Directional Index suggesting current uptrend is in a
- Call buying on FB has been very aggressive during the past 10
days, with three calls bought for every put, indicating an
extreme in optimism.
- Enormous call open interest resides at the 38-,39-,40-, and
41-strikes for the September/October series which could represent
roadblocks for further price appreciation.
- Based on average daily volume, it would take less than a half
a day for shorts to cover, an indication that most of the shorts
have left the building.
- Analyst community favors FB, as 26 out of 30 rate the shares
a "buy" or better
With optimism running high and a possible overhead resistance,
avoid initiating new aggressive long positions. If interested in
shorting use a stop above $40 and target $34 area.
This article by Tony Venosa, CMT, was originally published on
Schaeffer's Investment Research
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