Facebook’s Faceplant

$20 billion here, $20 billion there.  Pretty soon you’re talking real money.

Maybe Zuck should have accelerated his sales a bit more.

Facebook’s disastrous conference call and outlook has seen the stock plummet 25% from its earlier highs.Note that this brings FB back below:

(1) the trend line which has buoyed it since April 4;
(2) the neckline of the H&S Pattern it completed in March; and,
(3) its 200-day moving average

If this all sounds familiar, it should.  In March [see: Facebook Flops] FB fell below its SMA200, completed a H&S Pattern targeting 140, and experienced a death cross — all within the span of 3 weeks.We noted at the time that the outcome was important, as previous stumbles of this sort were strongly correlated with market corrections (shaded areas below.)  Three months ago, on April 25 [see: More Than One Way to Skin a Cat], Facebook’s Q1 earnings came out, but barely moved the stock.  A few minutes later, however, after a $9 billion stock buyback plan was announced, the stock bottomed, recovered back above all that overhead resistance, and went on to new all-time highs.

This was a repeat, of course, of the Nov 2016 episode where FB plunged below its SMA200, completed a H&S Pattern, and experienced a death cross.

Of course, the H&S Pattern never played out, and the Trump Dump was snatched from the cradle and rebranded the Trump Rally [see: Why the Trump Rally is a Fraud.] But, that’s another story.

That particular near-disaster was averted with a $6 billion stock buyback plan [are we seeing a pattern here?] $4 billion of which was still unused at the time the $9 billion plan was announced 17 months later.The neckline is currently around 175 — right on top of the .618 retracement at 175.61.  The SMA200 is at 181.53.  With the stock lingering below each of those in the after-hours, one can only wonder how many “undervalued” shares will be reacquired by tomorrow’s open.  Odds are it’ll be however many it takes to get the stock back to 182.

Or…maybe it’s time to announce a whole new buyback.

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