Social media giant Facebook, Inc. (FB) set its all-time intraday high of $195.32 on Feb. 2, then plunged 23.7% into bear market territory to its 2018 low of $149.02 set on March 26. The stock subsequently recovered this entire loss with a bull market gain of 30.8% to a secondary high of $195.00 set on June 5. This is quite a volatile ride as the company tries to eliminate the unethical use of customer data, which began to come to light with the news of the Cambridge Analytica data scandal that hit on March 19. Shares of Facebook closed Thursday, June 7, at $188.18, up 6.6% year to date and in bull market territory at 26.3% above the 2018 low.
This morning, we learned that Facebook suffered from a data glitch as the platform incorrectly changed posts to "public" for up to 14 million users. This bug was said to be present between May 18 and May 27. This issue has been fixed, but users affected must still be notified. Shares of Facebook moved as low as $185.25 in pre-market trading this morning, which is below my monthly pivot of $187.85. (For more, see: Facebook Shared User Data with 60+ Companies.)
The daily chart for Facebook
Facebook stock held its 200-day simple moving average of $168.79 on Feb. 9 then failed to hold it at $172.54 on March 19 when the Cambridge Analytica scandal hit. Then, on April 25, the company reported much stronger-than-expected earnings, and by May 4, the stock was back above its 200-day simple moving average, then at $174.34. Between March 20 and April 25, investors had the opportunity to buy at or below my annual pivot of $162.65, which is the lowest horizontal line on the chart above. The stock is now above its quarterly and semiannual pivots at $178.69 and $182.90, respectively, which are the middle two horizontal lines. This puts the focus on my monthly pivot of $187.85, with a weekly risky level above the chart at $203.59.
The weekly chart for Facebook
The weekly chart for Facebook is positive but overbought, with the stock above its five-week modified moving average of $182.45. The stock is well above its 200-week simple moving average at $122.91, also known as the "reversion to the mean," which has never been tested for shares of Facebook. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 83.55 this week, up from 79.45 on June 1 and moving above the overbought threshold of 80.00. A weekly close below $182.45 would be confirmation of a double top.
Given this analysis, investors should buy Facebook shares on weakness to my annual value level of $162.65 and reduce holdings on strength to my risky level of $203.59. My quarterly, semiannual and monthly pivots are $178.69, $182.90 and $187.85, respectively. (For additional reading, check out: Socially Responsible Funds Flee Facebook Stock.)