Facebook Stock Prices Drop. Is it a Correction or Serious Break in Up Trend?

Facebook Stock Prices (NASDAQ:FB) have lost more than 6% in value according to the results of yesterday’s trading session amid the publication of a quarterly report with a slowdown in financial performance and a significant increase in costs.

Earnings per share of $2.56 and revenue of $21.08 billion exceeded Wall Street’s expectations. Over the past week, Facebook shares fell by 4.66%. The S&P 500 index for the same period decreased by 1.26%.

Facebook stock appears to be down because of the more significant slow down in the US. This will result in decreased spending on advertising, which will result in less money for Facebook.

Michael Levine from Pivotal Research Group said, “The slowdown, particularly in the US, was far greater than we expected and sounds likely to persist,” Levine wrote in a note. “We expect these results to act as an overhang to the entire online advertising coverage universe — so expect to see peers under pressure.”

Facebook financials
Facebook Financials

The Markets Today –

American investors are focusing on yesterday’s preliminary data on US GDP and the epidemiological situation in China. Q4 2019 economy grew by only 2.1%, and on an annualized basis – by 2.3%, which is the worst indicator for the last three years. The US administration counted on at least a 3% increase in GDP. The slowdown in economic growth was facilitated by a decline in exports due to the tariff war with China and a reduction in private investment. Yesterday, US Secretary of Commerce Wilbur Ross commented on the situation with the Chinese virus. In an interview with Fox Business Network, he said that the spread of the disease could help bring production back to the United States, as well as to increase jobs.

Eurozone
The data on retail sales in Germany published today, as well as on GDP and inflation in the EU, turned out to be negative, but EUR did not react to them. Retail sales in Germany for December fell by 3.3% instead of the expected 0.5%, while the annual growth slowed from 2.7% to 0.8%. According to preliminary data, the growth of the European economy in the fourth quarter of last year decreased in quarterly terms from 0.2% to 0.1%, and in annual terms – from 1.2% to 1.0%, which is also worse than market expectations. Only the consumer price index for January rose from 1.3% to 1.4% but remained far from the target level of 2.0%.

United Kingdom
United Kingdom will officially leave the EU tonight, and a transitional period will begin during which the parties will try to agree on further trade relations. It is already clear that negotiations will not be simple since the British government insists on a deal with zero tariffs and quotas. At the same time, EU officials believe that, in this case, the British business will receive significant advantages due to the possibility of unlimited subsidies from the government. Besides, investors are confused by the limited period for negotiations, which is 11 months and is considered too short. In case of a lack of compromise, trade between the EU and the UK will be carried out according to WTO rules, which will negatively affect it. Thus, a hard Brexit may not be avoided but only delayed for a year.

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Oil Prices
Oil quotes are again declining today. In general, the oil market remains under pressure due to the ongoing epidemic of the deadly coronavirus in China. Yesterday, WHO considered the current outbreak as “a public health emergency of international concern”. However, the organization did not recommend unnecessarily reducing visits to China, which slightly reassured the market. However, restrictions already imposed on traveling within the PRC may prevent workers from arriving at their jobs after the New Year’s celebration, which could negatively impact production. In the evening, the publication of the Baker Hughes report on active oil platforms in the United States of America is expected. Previously, the number increased from 673 to 676 units. Continuation of this trend may put additional pressure on the instrument.

Facebook Support and Resistance

The shares of Facebook went down after many months of continued growth. Facebook stock prices quotes renewed new recent lows and are currently consolidating. The critical range is 204.00–213.00. There is potential for further correction. The indicators do not give accurate signals: the price has fixed between MA (50) and MA (200); the MACD histogram is in the negative zone. It is better to open the positions from the key levels.
Resistance levels: 213.00, 224.00.
Support levels: 204.00, 194.00, 189.00.

Facebook Trading Ideas

Short positions may be opened after the price consolidates below the level of 204.00. The closing of the profitable positions is possible at the levels of 196.00, 190.00, and 182.00. Stop-loss – 212.00. Long positions may be opened after the price consolidates above the level of 213.00 with the targets at 226.00–234.00. Stop-loss – 205.00.

mifinance

Facebook Stock Price Recommendations

Jan-30-20 Downgrade Pivotal Research Group Buy → Hold $245 → $215
Jan-29-20 Upgrade Raymond James Outperform → Strong Buy $230 → $270
Jan-27-20 Reiterated Stifel Buy $240 → $250
Jan-10-20 Initiated Bernstein Outperform
Dec-30-19 Reiterated Aegis Capital Buy $235 → $300
Dec-18-19 Reiterated Deutsche Bank Buy $260 → $270
Dec-05-19 Upgrade Stifel Hold → Buy
Dec-05-19 Initiated HSBC Securities Reduce
Dec-03-19 Initiated Piper Jaffray Overweight
Nov-05-19 Upgrade Daiwa Securities Outperform → Buy $235 → $250
Oct-31-19 Reiterated RBC Capital Mkts Outperform $260 → $270
Oct-28-19 Resumed Stifel Hold $180 → $205
Aug-02-19 Resumed MKM Partners Buy $190 → $245
Jul-25-19 Reiterated Pivotal Research Group Buy $220 → $225
Jul-25-19 Reiterated Monness Crespi & Hardt Buy $250 → $260
Jun-27-19 Reiterated Deutsche Bank Buy $220 → $230
Jun-11-19 Upgrade MoffettNathanson Neutral → Buy $210
May-29-19 Initiated Pivotal Research Group Buy
Apr-25-19 Upgrade UBS Neutral → Buy $170 → $240
Apr-25-19 Reiterated Monness Crespi & Hardt Buy $225 → $250

1 Day Moving Averages – Sell

Name Value Action
Exponential Moving Average (5) 216.34 Sell
Simple Moving Average (5) 216.67 Sell
Exponential Moving Average (10) 217.36 Sell
Simple Moving Average (10) 218.98 Sell
Exponential Moving Average (20) 215.84 Sell
Simple Moving Average (20) 217.38 Sell
Exponential Moving Average (30) 213.36 Sell
Simple Moving Average (30) 213.26 Sell
Exponential Moving Average (50) 208.80 Buy
Simple Moving Average (50) 207.64 Buy
Exponential Moving Average (100) 201.28 Buy
Simple Moving Average (100) 197.11 Buy
Exponential Moving Average (200) 192.52 Buy
Simple Moving Average (200) 192.42 Buy
Ichimoku Cloud Base Line (9, 26, 52, 26) 213.90 Neutral
Volume Weighted Moving Average (20) 216.82 Sell
Hull Moving Average (9) 216.13 Sell

Thomas J. Raef -

Thomas J. Raef - "T Rex"

Tom, aka T Rex, is seasoned financial pro that cut his teeth on the Chicago trading oil futures in 1995. In less than 3 years he bought his own seat and set up shop on the exchange. For the next 10 years Rex traded his own account and some institutional accounts. In 2017, he decided to move to Florida and focus on educating traders and writing for financial websites.

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