I have long hated
. Even after the shares were cleaved after its IPO, the stock
still seemed overvalued.
Despite the Facebook fever that gripped traders this summer, I
shied away from buying the stock. In fact, I advised ChartWatch
readers that it was
time to sell
FB shares near $33.
Instead of Facebook, I offered several other stocks, such as
To wit, Apple and LinkedIn shares have risen an incredible 18%
each. Meanwhile, Facebook slumped from $33 to as low as $17.55,
nearly half its market value.
However, FB appears ready to rebound, as its chart has the
makings of a bottom.
The $20 area (blue arrows) has proven to be a strong support
zone. Though the shares briefly dipped below $18, buyers quickly
bid the price back above $20. This shows a keen buying interest
exists below $20, giving traders a natural stop loss.
This chart shows the price of
shares along with an important support area for you to
On the flip side, sellers are strong near the gap (blue circle)
and near $33 (blue line). The bottom portion of the gap is near
$24 and FB challenged that level twice last month, only to be
turned away both times.
If it weren't for
calling for a decline to $15, the stock would have likely taken
$24 resistance out in September.
piece blasting Facebook spurred a 10% decline from $22.86, the
shares found support at the blue arrow, then found their way back
Together, the blue arrows form a nice double-bottom formation
that should provide the momentum to take FB through $24 and back
up to $28 (top of the gap resistance).
With any luck, CEO Mark Zuckerberg will report a solid quarter
and guide higher as Facebook
ramps up mobile
Facebook has more than 540 million monthly mobile users, yet it
makes no money off them. Facebook management understands that
this needs to change … and it will.
The future looks much brighter for Facebook than it did three
months ago. Though I believe AAPL and LNKD are better companies,
Facebook shares have more potential upside at this time.
Equities mentioned in this article: FB, AAPL,