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minoo

Facebook Thread for Analysis & Investment

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Is Facebook showing good value now or has still further to trade down

 

How would you possibly analyse a recently (very limited Data) floated share like Facebook

 

Its around 40% lower than it inital hour trading high of 45.

 

4th June close 26.89 and Low so far is 26.44.

 

Would like to identify viable support (23.5 ?) level to start accumulating (average into) this stock ? ?

 

Would like your Analysis & Comments about this particular stock

 

Thankyou Minoo

FB-4June.thumb.png.288df91096929c7d63db9270ced2efec.png

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It's worth about $7 .In fact i'm gonna be bold with this one.There will come a time when some investors...(mugs?) will pray it goes up to $7

Naturally,life is too short to bother looking at the chart right now.

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...

 

Would like to identify viable support (23.5 ?) level to start accumulating (average into) this stock ? ?

 

...

 

 

 

Sounds like you have bought the stock already. Have you ever heard that averaging is usually not a good proposition in trading? This is no exception. Sell all of your holdings in FB and wait for a bottom forming...

 

Not only that you increase your losses if you keep holding the stock, but you have also opportunity costs. Instead of holding the stock and analyzing it and/or hoping for it to return you could make money elsewhere in the meantime. FB is not the only tradable instrument out there...

 

Accept and take the losses and move on.

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I agree with the other posters here ...take your losses (if you have any) and move on. FB's ads don't work, the ecommerce stores didn't work, the tax on game revenue is questionable as zygna's revenue is questionable, in short the killer revenue model is still unknown. The social media bubble is bursting right before our eyes.

 

MMS

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Thankyou all for the response, much appreciated

 

I mostly daytrade futures and cyclically invest with ETF and use option or futures for hedging my portfolio

Have so far left individual stocks alone and thought to take up the challenge with FB (Dont particularly know why it appeals to me but a challenge)

 

I dont normally initiate an investment without proper insurance to the support area (ie put options)

Enroute to London when working for a prop firm in London; One of the respected trader told me in flight: Just as one buys insurance before their travel one should do the same with any of their investment till atleast you can lock in profit. Since following the advise, I have done well with my protfolio & managing the Assets accordingly. I also believe in Sell in May and Go Away; Got rid of various Commodity based Assets and looking to Diversify a little now.

 

With FB I missed taking out the put options and its coming to some initial support (refer aobve chart). I have work out to average into this stock so bought the first lot below 27 (@ the1st support on my chart) and plan to average into it till 23.5. This initial execution may work out as mean reversion phenomena may help the stock, I may employ this profit as stop loss margin later. Every 1% in profit I will Scale in and at 3% in profit I will lock in some gains. Good going so far.

 

Updating this in the initial half hour of the market open, so there are no hindsight doubts.

Any feedback appreciated; Now back to trading .....

 

Thanks Minoo

Edited by minoo

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1 June Inside Day Gap fill at 27.72; So locked in profit

Seeking entry further below, I will try to avearge into this by buying it cheaper than my first support entry below 27 or when it again crosses my 1st support level above

Will FB make double bottom or 2B type divergence pattern ? 10:15 EST

 

Refer Chart, -Ta Minoo

FB-Trade01.thumb.png.90e8c8f7507ed3d06386f6aa48c66327.png

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The 3% profit is deployed as stop loss below the low so far as my entry is Averaged in near the low; FB is coming to test this low so far at 26.61

ES futures mean reverts to VWAP, test from above so hopeful of positive test for support here, EST 1100 +

 

I got to work my ES entry at VWAP (If ES falls 2 point below VWAP most probably I will exit out of FB)

 

Refer FB Chart for entry and test of area

 

Good Trading Minoo

FBTrade-02.thumb.png.c58d3168936df4ef335a528d3b4fad8d.png

FB-Trade02-Test.thumb.png.88ffaf1cc1bcf88fde66d82241436e39.png

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FB prices have come to my next area lower to Average In

While FB is trying to make new low here (around 26 ish)

ES is trying to make new high, with Market Internals staying positive

A classic price divergence

 

The only thing to wait on FB is now the Net Vol to turn positive after price dipping below 26

I would like to Average in another part of the first-lot, When Net Vol turns positive on FB.

 

Refer FB Chart

 

Enjoy Minoo

 

As I post this the 26 area is being tested on FB, EST 1518

FB-AverageEntry02.thumb.png.092726d6ec4f69fb1ca260ece65e082f.png

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FB prices have come to my next area lower to Average In

While FB is trying to make new low here (around 26 ish)

ES is trying to make new high, with Market Internals staying positive

A classic price divergence

 

The only thing to wait on FB is now the Net Vol to turn positive after price dipping below 26

I would like to Average in another part of the first-lot, When Net Vol turns positive on FB.

 

Refer FB Chart

 

Enjoy Minoo

 

As I post this the 26 area is being tested on FB, EST 1518

 

Personally,that would have alarm bells ringing for me.But,we all tend to suffer from confirmation bias occasionally.I just always thought that trading is best done backing high probability plays,but each to his own i guess.

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FB EOD Update

 

Forgot to mention I went flat on the FB puts before CBOE close, purchased at 1 June Gap fill level in the AM

I prefer to use put options instead of static Stop Loss on Stocks and ETFs while averaging into its value

I mentioned my intention to Average in right from the out set as its difficult to trade the bottoms.

Note: Put option increases in value as one gets to average in at lower prices

 

FB shyed away couple of ticks from entering the final Average In Zone so did not manage to Average in the Last part of my first lot (Refer Chart);

But amticipated buyers at close so am glad to be out of put position

 

If overnight ES session trades higher towards 1300 than FB has good chance to Gap Up along with the indices at open tomorrow

FB closed 25.87 with Good Positive Net Vol

 

Note: This type of investing is certainly not meant for the newbies or traders who does not understand the Hedging concept, but you may learn, Non-price data on indices and the stock is vital, note where the ES fair value closed today.

New Stocks / IPO like FB lacking in Data are challenging, I am just taking it publicly to adhere & be consistent at the method.

 

Keep an Open Mind and you may Learn, who knows either from my mistakes or method,

Its not about being wrong or right, The Market always will take care of that.

My intention is to try use this method to be more consistent with this Challenging Market & Stock. Trying it out publicly may Help my concious behave consistently, Amen!

 

Goodnight Minoo

FB-5June-EOD.thumb.png.e61148999ec49aa827db8db63c47b331.png

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Often IPO stocks give a surge some time after the offering.

However with all the negative hype on

FB the odds might be against you here.

But best of luck, if sentiment impoves it could bounce nicely.

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FB EOD Update

 

Forgot to mention I went flat on the FB puts before CBOE close, purchased at 1 June Gap fill level in the AM

I prefer to use put options instead of static Stop Loss on Stocks and ETFs while averaging into its value

I mentioned my intention to Average in right from the out set as its difficult to trade the bottoms.

Note: Put option increases in value as one gets to average in at lower prices

 

FB shyed away couple of ticks from entering the final Average In Zone so did not manage to Average in the Last part of my first lot (Refer Chart);

But amticipated buyers at close so am glad to be out of put position

 

If overnight ES session trades higher towards 1300 than FB has good chance to Gap Up along with the indices at open tomorrow

FB closed 25.87 with Good Positive Net Vol

 

Note: This type of investing is certainly not meant for the newbies or traders who does not understand the Hedging concept, but you may learn, Non-price data on indices and the stock is vital, note where the ES fair value closed today.

New Stocks / IPO like FB lacking in Data are challenging, I am just taking it publicly to adhere & be consistent at the method.

 

Keep an Open Mind and you may Learn, who knows either from my mistakes or method,

Its not about being wrong or right, The Market always will take care of that.

My intention is to try use this method to be more consistent with this Challenging Market & Stock. Trying it out publicly may Help my concious behave consistently, Amen!

 

Goodnight Minoo

 

You forgot to mention it? Oh ok. I'm sure most of us understand the hedging concept...and the need for uh timely application of the appropriate method.I never trade stocks,but if it did indeed gap up,for me, it would be an ideal short,given my personal opinion of it.

Looks like this thread could get unexpectedly interesting.Please,carry on.

Edited by mitsubishi

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Indeed ES touched 1300 in overnight trading and gracefully mean reverted to 1290 ish just before RTH opening & back to 1300 level around EST 1000

 

Opening Notes

Market Internals from the open were strongly positive, With $Tick so far in positive only terrritory

So seeking entry near the lows on positive net vol on FB when / if it retest the low area

FB fabulously dipped below 26 (opening low =25.52) so Limit Order at 25.60 (24.6 would been text book trade but .. . . taking what market is giving now & getting back to my futures trading)

Order got filled almost instantly, so snapping and sending

I will give this averaged in positions the time and room to work out

As I scale in at higher levels I will trail the stops up

Got to pay attention to my daytrading now, yesterdays 1277 at VWAP was an key area

 

Enjoy Minoo 1013 EST

FB6June-FirstLotAveragedIn.thumb.png.c3908e7a598cd976e8d76bbe53d06079.png

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A quick update

 

Entry at 26 on retest with positive net vol

 

As I am writing this (EST 1445) FB at 26.5, so locking in some gains here, same as in AM

 

Refer Chart

FB-6June-Entry@26.thumb.png.2b5689a6ca069cee96ebb9728fd0ffe5.png

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Trade Progression

 

Targets to Lock in Gains

 

As I post this again 26.96 (Orange line in chart), Trigering some profit taking

But Net Vol is still positive so just Trailing Stop close some profit taking

 

Refer to Chart Please

 

I am done for today

 

Thanks Minoo

EST 1501

FB-6June-Targets.thumb.png.4f91ba884333a524bafb9cea2a713737.png

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Ok here is the chart

 

Look at the Net Vol in top left corner of 1st Window

I trial it as long as the Net Vol remain positive

Nearing R1 as it got negative I took off some profit (6 June)

Got to go, I may not update tomorrow

 

Enjoy Minoo

FB-6June-ProfitTaking01.thumb.png.c743b19dee68c6f1138f61813f01023b.png

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Even at $7 I think Facebook would be hugely overvalued. That would mean a market cap of around $15b for a co that made only $1b in profits last year.

 

Just like AOL,fb is a fade, people get way to caught up in what is hot for the day instead of looking at the large picture. Technology and the way we use the internet is changing faster and fast; do you really think that in 15 yrs from now kids will be signing up for fb? No way imo, fb will be history and long forgotten just like another wall st darling in its day; AOL

 

the fact that they did the IPO at valuation close to $100b is an insult to any sane rational investor. Even Google (which has 10 times the lasting potential into the future that fb does) went public well under $25b

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Even at $7 I think Facebook would be hugely overvalued. That would mean a market cap of around $15b for a co that made only $1b in profits last year.

 

Just like AOL,fb is a fade, people get way to caught up in what is hot for the day instead of looking at the large picture. Technology and the way we use the internet is changing faster and fast; do you really think that in 15 yrs from now kids will be signing up for fb? No way imo, fb will be history and long forgotten just like another wall st darling in its day; AOL

 

the fact that they did the IPO at valuation close to $100b is an insult to any sane rational investor. Even Google (which has 10 times the lasting potential into the future that fb does) went public well under $25b

 

Agree.I have a theory that the numbers have something to do with it.Remember when Congress voted no,initially,to a $750 million bail out? They were shocked at that big number.Now it's billions and trillions being pumped into the banks/countries.So £100b probably doesn't sound very much to Joe the plumber anymore.We can see who made the money and who is going to lose,that part never changes.Shorting this piece of crap is a no brainer:2c:

Hopefully the OP got out at 10 am ET.

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Just the same thing (Get rid of Put before CBOE close and Buy the Stock)

 

As ES came to my area of 1306 after filling the overnight Gap at 1309 ish

$Tick hook up with ES Net Vol starting to pick up

 

FB nicely came near the aformentioned 26 Area

And limit order at Pivot area just above 26 got executed

(Refer Chart)

 

Will we get the chance to average in below 26 tomorrow or will the area Breakdown ? ? ?

 

I am just trading Technically here; Not much of News or Fundamental Guy

Its very difficult to be consistent as it is; Too much of such information makes me compromise my system so I avoid it if possible.

 

Goodnight Minoo

Note: I bought FB even though the Net Vol was negative but use the anchor chart of ES instead

FBTrade01-7June.thumb.png.3d35d2e93bb3a9d3e0b99de2d2a8fc05.png

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As requested my ES Chart

I primarily daytrade the emini Indices ES & NQ

 

I use put options on popular Indices at areas of Target to protect my Invested ETF Portfolio

 

FB stock is not part of my portfolio & am experimenting with it and doing the same thing

I never invest the whole lot in, always Average In around the identified Areas and Scale In when market permits

At Targets collect some profit & employ Put option (When Big Picture is Bearish) to protect the rest;

Again at Support below Buy the Stock using Indices charts support and non price data events

Thats it.

 

Hope this helps

Minoo

ESAnchor(7June).thumb.png.e0a1f718ea132b4b383fa7303de3752b.png

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Just the same thing (Get rid of Put before CBOE close and Buy the Stock)

 

As ES came to my area of 1306 after filling the overnight Gap at 1309 ish

$Tick hook up with ES Net Vol starting to pick up

 

FB nicely came near the aformentioned 26 Area

And limit order at Pivot area just above 26 got executed

(Refer Chart)

 

Will we get the chance to average in below 26 tomorrow or will the area Breakdown ? ? ?

 

I am just trading Technically here; Not much of News or Fundamental Guy

Its very difficult to be consistent as it is; Too much of such information makes me compromise my system so I avoid it if possible.

Goodnight Minoo

Note: I bought FB even though the Net Vol was negative but use the anchor chart of ES instead

 

What about the market reaction to the Bernanke?

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