In his second "Executive Decision" segment of Mad Money Tuesday evening, Jim Cramer spoke with Sheryl Sandberg, COO of Facebook (FB) , which announced Tuesday that it will invest $100 million in cash grants for up to 30,000 small businesses.
Sandberg said Facebook has been hearing a lot from small businesses since the coronavirus began and they need assistance. She said many businesses can't depend on their bank or local government for help, which is why they are planning to help where they can.
Sandberg noted that Facebook itself is shuttering its offices and encouraging all employees to work from home and are giving all employees a $1,000 bonus to help them with added expenses from the disruptions the virus is causing.
Let's keep our distance and check out the charts of FB.
In this daily Japanese candlestick chart of FB, below, we can see that prices topped out earlier than the broad market and turned lower in January. Prices are now well below the declining 50-day moving average line and the declining 200-day moving average line. If the 50-day line crosses below the 200-day line for a dead cross sell signal it will obviously be very late. Currently there are no clear bottom reversal patterns on this chart but we only need one day to find one.
The daily On-Balance-Volume (OBV) line did not peak until February and the 12-day price momentum study is showing equal lows in March when prices have made lower lows. This is a category of bullish divergence but it is not the strongest category and it is not very big either.
In this weekly chart of FB, below, we can see that prices have corrected (or wiped out) more than 3/4 of the prior rally from the 2018 low. Prices are below the declining 40-week moving average line. The weekly candle pattern could be a long-legged doji but we have to wait for Friday to be sure.
The weekly OBV line has weakened since the middle of January telling us that sellers have been more aggressive and the 12-week price momentum study does not show that the decline has slowed.
In this first Point and Figure chart of FB, below, we used daily price data. The chart shows that a downside price target of $179 has been reached and exceeded.
In this second Point and Figure chart of FB, below, we used weekly price data and here the chart shows a potential downside price target in the $62 area.
Bottom line strategy: With so many people staying at home I would think that millions or billions of people are on FB every day. The key question is whether that will translate into advertising dollars. The price of FB is in an area where someone might begin buying but in this market environment it will be safer to let someone else do the buying for now. I would want to see more lower shadows on the daily candlestick chart before suggesting purchases.