Stop worrying about the shape of the recovery and stay focused on the size of the decline, Jim Cramer cautioned his Mad Money viewers Tuesday.
It's still possible that we've not seen the bottom of this economic drop and millions more layoffs are still ahead. That means investors must stay vigilant, investing in companies that thrive in the new Covid-19 world.
Facebook Inc. (FB) has proven itself a winner, with a renewed focus on small business. The other day the company introduced Shops, a measure to make it easier for companies to list products on Facebook and Instagram.
Let's check out the charts of FB.
In the daily bar chart of FB, below, we can see that prices are retesting their January highs. Prices are above the rising 50-day moving average line and the rising 200-day moving average line.
Trading volume has remained active since March and the daily On-Balance-Volume (OBV) line has been super strong and has been in new high ground this month. The OBV line is a coincident and sometimes a leading indicator as buyers will accumulate shares ahead of the breakout.
The Moving Average Convergence Divergence (MACD) oscillator has narrowed but it is still pointed up and thus renewed price strength should refresh the buy signal.
In this daily Point and Figure chart of FB, below, we can see that a trade at $224.71 will be an upside breakout. The chart also shows a price target of $245.
In the weekly bar chart of FB, below, we can see that prices have been in a large consolidation pattern the past 2 1/2 years. The height of the pattern is around $80 and when added to the breakout level yields a potential price target in the $300 area.
Bottom-line strategy: If you are already long FB -- great. If you are looking to initiate a new position or add to existing longs then try to buy FB at $220 or better. Risk a close below $205 for now. Our price targets are $245 and then $300.