Wednesday, October 24, 2012

An Initial Look into Facebook




Like a marriage, sometimes it sours! If ever there was a perfect analogy, Facebook would be it. Since it's botched IPO, the marriage between investors, analysts and Facebook stock has soured. 

The stock has been beaten... taken out to the woodshed and spanked. Not even Rocky could with stand this kind of beat down YET FB posted earnings that Wall Street (those who pummeled the issue)loved and now WS makes a peace offering by pushing the stock up +30% since the week ending 10/19/2012. 

How It May End


While I will not attempt to label this chart until a clear pattern has ended, we can count on one rule of the elliott wave principle to guide us. If the decline from 5/18/2012 is impulsive... wave overlap can't occur before reaching the termination of a five wave sequence to the downside. Therefore, the key level is $25.52. Should price print above this level, then the decline from $45 to $17.55 is in three waves. 

Should this event not occur, then odds are that today's earnings excitement will be met with further selling that leads to further loss of market cap.  OUCH!!!

Best of Trading



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