• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Facebook Has Made a Triangle Formation: Which Way Will the Scales Tip?

Let's check out the charts to see what clues we can uncover.
By BRUCE KAMICH
Dec 10, 2020 | 01:00 PM EST
Stocks quotes in this article: FB

The charts of Facebook (FB) are "interesting" at this point in time and so is the news that the company is facing an antitrust suit brought by the Federal Trade Commission (FTC) and a coalition of 48 state/territory AGs. A triangle formation has been unfolding since August and we could be close to a breakout. The $64,000 question is the breakout going to be on the upside or the downside?

Let's check out the charts to see what clues we can uncover. 

In the daily bar chart of FB, below, we can see lower price highs since late August and higher lows from late September. The trading pattern has gotten tighter and tighter between highs and lows. Trading volume has diminished over the past three months or so and that is typical during triangles. The On-Balance-Volume (OBV) line shows a slight decline from late August suggesting that sellers of FB have been slightly more aggressive.

The Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line since late September. 

 
 
In the weekly Japanese candlestick chart of FB, below, we see a mixed picture. In the past four months it looks like there are more upper shadows than lower shadows. This observation is subjective but if it is correct then we are seeing more rejection of the highs than rejection of the lows. This means the path of least resistance could be lower.
 
The slope of the 40-week moving average line is still positive and the weekly OBV line has leveled off. The MACD oscillator is in a bearish decline.  
 
 
In this daily Point and Figure chart of FB, below, we see a different picture of the price action. If we draw a horizontal line through the $276 level -- the approximate midpoint -- we actually see more price activity (X's and O's) below the line than above it. This would suggest we have been seeing more buying on weakness than selling on strength. 
 
 
 
Bottom-line strategy: I have no idea what will become of the FTC suit and how fast it could develop. Two of the charts above are weak but the Point and Figure chart suggests strength ahead. No one ever said forecasting was easy. A decline to $256 is likely to weaken the picture and could precipitate further declines.
 

(FB is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? 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.

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

More from Stocks

Don't Let the Rotation Deceive You: It Was Worse Than It Looked

James "Rev Shark" DePorre
Mar 3, 2021 4:48 PM EST

So-called reopening stocks hid some of the damage on the market, but here's what a deeper look tells me.

Compared to the Rest of the Market, International Game Tech Looks Pretty Good

Timothy Collins
Mar 3, 2021 3:12 PM EST

This isn't an aggressive trade in my view but I'm not sure I want to be aggressive here.

Jim Cramer: When Do We Go Back to Buying the Winners and Stop Buying the Losers?

Jim Cramer
Mar 3, 2021 2:35 PM EST

One of the most continual themes in this market is that anything that was liked last year is hated this year.

For Great Trading, There Are Times to Act and Times to Sit and Wait

James "Rev Shark" DePorre
Mar 3, 2021 2:00 PM EST

'It was never my thinking that made big money for me. It was always my sitting.'

SPACs' Slide Starting to Sting

Timothy Collins
Mar 3, 2021 1:54 PM EST

Here's my take on these blank check companies as the froth flattens -- and their post-merger vote floors fall out from under them.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 08:50 AM EST PAUL PRICE

    Michaels: Close to a Deal?

    It appears that a deal could be announced soon. ...
  • 08:34 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 3/3/2021

    SPX (Long-Term View) The 20 DMA @ 3889 with the ...
  • 06:05 PM EST PAUL PRICE

    Michael's (MIK) Up on Takeover Rumors

    The NYT says talks are underway regarding a buyout...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login