Facebook (FB) Stock Bearish Despite Rebound
The road has been rough for Facebook (FB) stock this year. This has been the case ever since the company reported earnings in late July that included a warning of slowing growth in its forecasts. Actually, Facebook’s real troubles started earlier than that. Trouble began in earnest when the company got caught up in a series of privacy and data scandals earlier this year. The most newsworthy of these had to do with the Cambridge Analytica debacle, which resulted in CEO Mark Zuckerberg testifying before Congress.
The Bottom Drops Out
Facebook stock actually recovered well from those scandals and went on to hit a new all-time high around $218 on July 25th. The next day, though, the bottom dropped out. Negative investor reactions to the company’s earnings guidance prompted a gap down and decline of nearly -20% to around $175. From there, FB has continued to trend down with progressively lower lows and lower highs – the textbook definition of a bearish trend channel.
Deep Bear Market Territory
At its most recent low, Facebook stock plunged to around $126 in late November, for a massive total decline of around -42% from its July high. We stopped talking about a correction or a ‘Death Cross’ in FB a long time ago – the stock is now deep in bear market territory.
Since that November low, FB has indeed rebounded – by more than 14% as of Thursday’s close. From a technical perspective, though, this just places the stock at or around the top of a descending trend channel, and just below the down-sloping 50-day moving average. In addition, momentum oscillators like the Stochastics are in overbought territory and looking to turn down.
Unless the stock has some catalyst to break out above the trend channel and moving average, the bias continues to be bearish. And the path of least resistance remains to the downside.
The Technicals Rating
The Technicals gives FB a bearish rating of 3 (on a scale of 1-10, with ’10’ being the most bullish and ‘1’ being the most bearish). Below are some of the key technicals for FB, as well as other relevant information, that help paint a bearish picture of the stock:
- Price Position vs 200-Day SMA: -15.44% (below) – BEARISH
- Position vs 50-Day SMA: -1.26% (below) – BEARISH
- Position vs 20-Day SMA: +4.62% (above) – BULLISH
- 200-Day Trend Slope (Linear Regression): BEARISH
- 100-Day Trend Slope (Linear Regression): BEARISH
- Stochastics (14,3,3) Level: Overbought – BEARISH
- RSI (14) Level: In the Middle – NEUTRAL
- Position in Bollinger Bands: At Upper Band – BEARISH
- Sector (ETF: XLC) Long-Term 200-Day Trend: BEARISH
- Sector (ETF: XLC) Medium-Term 100-Day Trend: BEARISH
- Market (S&P 500) Long-Term 200-Day Trend: BULLISH
- Market (S&P 500) Medium-Term 100-Day Trend: BEARISH
- Short Interest Ratio: 1.20% – BULLISH
- Analysts’ Mean Target Price: $194.05 (far above current price) – BULLISH
- Last Earnings Reaction: Sharp Gap Up – BULLISH
Overall The Technicals Rating for FB: TTTTTTTTTT (3 out of 10) – BEARISH
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Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don