Facebook Inc. (FB) is the Stock of the Day this Monday at Real Money. FB evidently wants to increase its global consumer advertising spending by more than double within the next two to three years. The stock is up in early trading activity. Let's check out the charts and indicators to see if this early strength is sustainable.
In the daily bar chart of FB, below, we can see that prices for the social media company broke below the cresting 50-day moving average line and rebounded off of the bottoming or flat 200-day moving average line. As of Friday FB was back to the 50-day line and we are likely to open above it Monday morning.
The advance this month has been on light volume and the On-Balance-Volume (OBV) line has only made a small recovery. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside from below the zero line for a cover shorts buy signal.
In the weekly bar chart of FB, below, we can see that prices corrected down to the flat or bottoming 40-week moving average line. The weekly OBV line has been declining since late April and signals more aggressive selling.
The MACD oscillator is poised to cross to the downside for a take profits sell signal but if Monday's early strength continues we could see that bearish signal reversed.
In this Point and Figure chart of FB, below, we can see an upside price target of $195 being projected. This would short of a new high and an upside breakout.
Bottom-line strategy: We looked at the charts of FB earlier this month and they do not look much better today. FB could strengthen Monday but I do not at this time anticipate a breakout over $200.