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  1. Home
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Everyone Is Home and on Facebook, so Will the Stock Bottom?

A look at the charts and indicators of this important FANG name.
By BRUCE KAMICH
Mar 24, 2020 | 12:42 PM EDT
Stocks quotes in this article: FB

The market averages are soaring Tuesday so we need to ask whether Facebook, Inc. (FB) made a durable low. Let's see how many of our friends like the idea. 

In the daily Japanese candlestick chart of FB, below, we can see how the stock price plunged rapidly from January. Prices made a lower high in February and then gapped lower near the end of the month. The slope of the more responsive 50-day moving average line is negative and so is the slower-to-react 200-day moving average line.

The trading volume has surged the past five to six weeks, which tells us that traders and investors have been active. In the middle of all this volume we may have seen a shift from weak hands to strong hands. The On-Balance-Volume (OBV) line has declined from the middle of February but not as much as I would have expected. That is another way of saying that prices may have fallen more of their own weight than from aggressive selling.

Moving Average Convergence Divergence (MACD) oscillator is in bearish territory but has narrowed toward a cover shorts buy signal. 

 
In the weekly Japanese candlestick chart of FB, below, we can see some interesting patterns like two long-legged dojis. The current bar could be a variation of a harami -- one of a number of reversals. The slope of the 40-week moving average line has turned negative.
 
The weekly OBV line is bearish and the 12-week price momentum study has not shown us any slowing yet. 
 
 
In this daily Point and Figure chart of FB, below, we can see that prices reached and exceeded their potential downside price target around $179. A trade at $160.21 will help to improve this picture.  
 
 
Bottom-line strategy: With so many people staying home and keeping in touch via Facebook I suspect the company will eventually benefit. The charts (above) of FB show that a number of positive signals are at hand. Be ready to go long and prepared to risk a close below $140.
 
(Facebook is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB? Learn more now.)
 
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are prohibited from trading individual securities.

Action Alerts PLUS, which Cramer manages as a charitable trust, is long FB.

TAGS: Investing | Stocks | Technical Analysis | Media | Advertising

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