2018 has been a crossroad for Facebook Inc. (Nasdaq: FB), and there’s lots of talk about the two major signs that Facebook is in big trouble:
- The Cambridge Analytica data breach lost the public’s trust for good.
- CEO Mark Zuckerberg's insane amount of insider selling ($3.5 billion this year alone).
But I see something altogether different.
Including an extraordinary chart…
Why Zuckerberg Is Selling Frantically
It's true. On July 6th, CEO Mark Zuckerberg sold another 480,000 shares worth $95 million. Despite that, he also just surpassed Warren Buffett to become the third-richest person alive, incidentally. Clearly he's not hurting for money, so why sell now?
And he's not the only insider dumping shares…
- CFO David M. Wehner sold 10,000 shares on 06/20/2018 at the average price of $199.9.
- VP and General Counsel Colin Stretch sold 750 shares on 07/05/2018 at the average price of $194.74.
- Chief Product Officer Christopher K. Cox sold 10,600 shares on 07/02/2018 at the average price of $194.13.
- COO Sheryl Sandberg sold 55,000 shares on 06/28/2018 at the average price of $195.53.
- VP and General Counsel Colin Stretch sold 1,500 shares in June at the average price of $199.09.
But for Zuckerberg at least, this is all just part of a regular schedule of selling. He announced back in September he'd be dumping tens of millions of shares this year in order to fund philanthropic initiatives, ultimately giving away 99% of his stake in Facebook to the Chan Zuckerberg Initiative with his wife Priscilla Chan.
It's perfectly innocent.
Fallout from the Cambridge Analytica Scandal
After the data breach came to light in March 2018, the company struggled to respond, and the stock fell about 20% as #deletefacebook started to trend and there were concerns about user privacy and advertising revenue with the new tighter regulations.
And now…
Maybe he didn't handle it as deftly as a seasoned CEO would. And maybe his testimony to Congress was the source of some chuckles. But Zuckerberg and his team pulled out of that tailspin and addressed the issues and still put in record profits.
This fast turnaround is reflective of investor confidence in Facebook's work to increase security, smooth over the user experience, and keep raking in the ad dollars.
Now I want to share the best analysis of the price action I've seen, courtesy of Live Trading News.
This Chart Shows Extraordinary Upside Action
Candlesticks
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum Indicators
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.6866. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 9 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.36. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 9 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 149.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 2 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 8 period(s) ago.
Summary
FACEBOOK INC A is currently 14.3% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of FB.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 1 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
Full analysis at Live Trading News
