Everyone in the investing world is busy with Meta Platforms Inc. (FB) here on Thursday. Quantitative analysts are plugging in new numbers. Fundamental analysts are deciding whether to cut price targets and/or ratings. Securities analysts in all the sell side firms are probably reading research notes ahead of the opening. And humble technical analysts are redrawing trend lines. I have said on Real Money a number of times that no investment approach is perfect and this is a great example.
We looked at the chart of FB on Jan. 4 and things were positive. We wrote, "Traders long FB could raise stops to $315 from $311. Add to longs above $353. $387 and then $411 are our price targets now." Traders following my recommendation should have exited the long side earlier this month. Let's check the charts again.
In this daily bar chart of FB, below, we can see the price action only through Wednesday's close. We have to imagine a pre-market price in the $253 area. Prices could open near the bottom of this chart as it is currently presented. Prices had already stopped at the declining 50-day moving average line and below the cresting 200-day moving average line. The trading volume has been heavier than normal since early November and perhaps some shrewd analysts or traders were reducing their long exposure. The On-Balance-Volume (OBV) line certainly shows a steep decline from November, telling us that sellers of FB were more aggressive. The Moving Average Convergence Divergence (MACD) oscillator turned bearish in early January.