Sunday, February 7, 2016
Facebook Round Trip
This continues to be a year of wealth destruction for the longs in the stocks market. Many observers have noted that the broader market has been decline for some time and only a handful of stocks (often called the FANG stocks - Facebook, Amazon, Netflix and Google) have been holding up the market.
You can tell the party is over when even those stocks get slammed, and even when they report good news. A case in point is my favorite Facebook FB. After earnings, it gapped up into new all-time high territory, taking out the old high at the gray line just short of 110.50. After that it rallied up to the next gray line at 114.86 and even exceeded that brushing up against a 4th level of Fib Lines which is not currently included in my FibLines indicator. Based on this price action, I may have to reconsider that decision.
In any case, Facebook then exhibited an almost perfect 3 bar reversal pattern and that level and turned south just to find support at the red line at 103.15 which is the 161% line in the FibLines sequence.
Next up is Amazon which recently reached an all-time high at $695 a share. Those earnings were not good and the stock sold off hard. The shares currently are trading at about $500 a share, off a stunning 28% from levels seen a mere 10 days back.
Next up in Netflix, off 36% from the top made earlier in December of 2015.
Last up is Google, another company that reported excellent results, and the shares also got spanked.
Check out how they got turned back at the orange line which was the last of the lines prior to the conclusion of the entire FibLines sequence.
You know its a nasty market when stocks reporting good news get punished along with those reporting bad news.
As for now, keep your powder dry its going to a long and nasty year for the bulls.
And BTW, you can get both the free and paid versions of the FibLines indicator over at my site at http://fibtools.blogspot.com.
Have a great week a preserve your capital.
Posted by C. Smith at 6:07 AM