Facebook Stock (FB): Bearish Short-Term, Bullish Long-Term

The FANG stocks (tickers FB, AMZN, NFLX, GOOGL) have lost their bite since the election, but they may be getting ready to bounce back. Facebook (NASDAQ:FB) has been particularly hard hit due to issues surrounding fake news items showing up in users news feeds.

Some users also reported a bug on November 11th when Facebook accidentally announced the deaths of people who logged into their accounts. Yikes. Embarrassing!

Following the election there has also been strong rotation out of tech stocks, but some market observers think trade might be overdone.

Since October 24th, Facebook stock is down over 13%. Will this trend continue or is this a buying opportunity?

I tend to fall in to the mean reversion camp and try to be greedy when others are fearful. There is a lot of negativity around Facebook’s stock currently and I see that as a buying opportunity.

We are 100% in the midst of a great technological revolution, not dissimilar to the industrial revolution of the late 1700’s and early 1800’s.  The pace of change in the tech industry is phenomenal with many industries being fundamentally and permanently disrupted. Facebook is a leader in the tech space and should continue to be at the forefront of technological advancement.

Purely based on the number of ads appearing on Facebook these days, you have to assume Facebook’s revenue will continue to grow. The ability to create target audiences for ads is far above what can be done on other platforms.

While there may be some further short term pain for Facebook shareholders, the stock is a good long-term buy in my opinion.

Looking at the technical picture, the major concern is the break of the 200 day moving average. Bad things can happen to stocks below that level and some big players will avoid stocks below the 200. Therefore, it might make sense to wait until the 200 is recaptured before jumping in.

Price was recently rejected at the prior trendline, however there is strong support around $112.

MACD looks bearish.

facebook-stock-chart-fb-bullish-price-support-levels-december-2016

All in all, the technical picture is not great. However, if you are willing to be patient, take a contrarian view and have a long-term horizon, you may get a good opportunity to buy some FB for a discounted rate.

Thanks for reading.

 

Twitter:  @OptiontradinIQ

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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