Technical Chart Analysis: Facebook’s Dead Cat Bounce
Facebook (NASDAQ:FB) shares are FINALLY catching a breather. But don’t get too carried away. The selling has been so deep and severe, there will be dead cat bounces along the way.
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Just a dead cat bounce? Well, I would normally think the stock may try to create a bottom. However, now that the federal investigations and shareholder lawsuits are pouring in faster than shots at the bar on a Friday night, FB shares are destined to bottom at … well … you’re guess is as good as mine.
No matter where we guess, the bottom line is these are extremely negative catalysts for the stock. And catalysts are the key driver for stock prices. If you want a comp, take a look at Groupon (NASDAQ:GRPN). The company has not been able to get out from under the dark clouds, and the stock has performed like shit for IPO investors. Unless you think a 60% loss is fair in a little over 6 months. OUCH!
Back to Facebook’s daily chart. The price range between $32.95 and $33.15 is still a major area of resistance. It’ll probably get another test. If not, keep your eye on yesterday’s lows as another scary place where shares could continue price discovery in the void.
Knowing which stocks have significant catalysts will help you know whether stocks are destined for higher or lower prices. In fact, “C = Catalyst for a Stockʼs Movement” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.
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