Social media giant Facebook, Inc. (FB) is a strong momentum stock that is approaching the status of having an "inflating parabolic bubble" condition on its weekly chart. Analysts expect Facebook to post earnings per share of $1.20 to $1.30 when it reports its results after the closing bell on Wednesday. The stock is not cheap, as its P/E ratio is 38.17 and the company does not offer a dividend.

A major issue that has been all but ignored by investors is the fallout from published posts from Russia-based operatives. There will be Congressional testimony concerning what Facebook said was some 80,000 posts over a two-year period designed to influence U.S. politics. Most of the posts are said to have been messaged to provide misinformation in the months before the presidential election a year ago. Some 126 million Americans were exposed to this so-called fake news. Will this be explained in the earnings guidance? Will it drag down advertising revenue in the third quarter or into the quarters ahead? (See also: Will Facebook Be the Next FANG Earnings Surprise?)

Facebook shares closed Monday at $179.87, up 56.3% year to date and in bull market territory at 58.4% above the post-election low of $113.55 set on Nov. 14. The stock set its post-election high of $180.69 on Monday, so the bulls are looking for additional gains. The daily chart supports this notion, as the stock has been above a "golden cross" since Feb. 1, when the stock closed at $133.23. A "golden cross" occurs when the 50-day simple moving average crosses above the 200-day simple moving average, indicating that higher prices lie ahead.

The weekly chart for Facebook

Technical chart showing the performance of Facebook, Inc. (FB) stockCourtesy of MetaStock Xenith

The weekly chart for Facebook is positive but overbought, with the stock above its five-week modified moving average of $174.01. The 200-week simple moving average or the "reversion to the mean" is $105.13. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 88.70 this week, up from 86.02 on Oct. 27, moving further above the overbought threshold of 80.00 but not yet above 90.00, which is the reading for an "inflating parabolic bubble." 

Given this chart, my trading strategy is to buy weakness to my weekly value level of $174.80 and reduce holdings on strength to my semiannual risky level of $180.34, which was tested at Monday's high of $180.69. My quarterly pivot is $179.24, and my annual value level lags at $109.79. (For more, see: Facebook's TBH Buy Is a Bet Against Snap: Cramer.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.