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Saturday, May 25, 2013

$FB weakness

Facebook has traded down 14 of the last 16 trading days, ever since they reported their solid earnings.

From technical perspective, the above chart looks like chaos, but the blue horizontal support line is legitimate. Its the resistance, from August-to-November, turned support.

FB is also very oversold. In fact, its the most oversold its been, since the CCI was able to begin calculating.

Their earnings report was pretty solid, allowing for the stock to rise some 5% after the release. But over the last two weeks, there was no negative chatter to be a catalyst for a 17% decline (from the 29 level).

The new negative developments surrounded the Home concept and the HTC First phone, which have seen underwhelming demand.  I barely view this as a negative because Home is more of an experiment as to where they can take mobile applications verse a centerpiece of the future. 

The only other negative development I could uncover is that their Insights data could not be view current data since May 13th. For an Ad company to not allow brands to view current data, and being slow to fix it, is a concern. (Does it merit a 8% decline since May 13th?)

Regardless of the negativity, the above chart suggests a liquidation. The level of negativity from the ADX suggest some fund(s) or person(s) are liquidating.

We know it can't be Mark Zuckerberg, as per an 8-K filing from Sept 4th 2012:
Mark Zuckerberg has not adopted a Rule 10b5-1 Plan and has informed us that he has no intention to conduct any sale transactions in our securities for at least 12 months. Mr. Zuckerberg currently holds in aggregate approximately 444 million shares of Class B common stock as well as 60 million shares of Class B common stock issuable upon the exercise of an option.
Those +400 million shares/options are locked in until Sept 2013.

On the positive side, and something that got very little chatter, is to have advertisers target users based on pretty recent activity through the site and the apps connected to the graph. Giving more accuracy to the target audience. 

After the recent earning's report, Facebook's position in mobile can not be denied. But the real catalyst I am waiting for is for Facebook to start leveraging their position as a local search engine (the link is to ComScore's infograph which highlights Facebook's position as a local search provider).  Facebook has to stop dicking-around with local search, and develop a product that people already utilize it for. Vis-a-Vis Wonder.

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