Tuesday, May 22, 2012

Facebook says Hello to $31.00

Following its rather dismal market debut on Friday May 18, 2012, we penned a short article entitled “Market Frowns on Facebook.” In it, we stated clearly that if Facebook lost its floor at $38.00 then we could say hello to Facebook at $31.00 dollars per share. On Tuesday May 22, 2012, Facebook met this prescient fate amid a print low of $30.98 dollars per share.


Following Friday’s flat faced premier; Monday began trade with a gap down open at $36.53. Setting a low on Monday at $33 even, Facebook traded as high as $35.05 before settling the session at $34.01.

Within the first ten minutes of trade on Tuesday, Facebook hit our downside price target of $31.00 amid a print low of $30.98. From the underwriters failed support of $38, the move down to $31 translates to a decline of 20%. From Tuesdays open, the 24-hour move down to our target measured in excess of 15%.

Frown on Facebook Day-3

Going forward, we have drawn a downward trajectory illustrating a speed line of resistance for the shares. If $30.98 marks a temporary floor, we should expect a snap back rally toward the $38 level if our speed line of resistance does not get in the way.

Smiles-a-three_thumb2

And yes, as for those following “the Pilot” today’s updated balance sheet for May still has us all smiling.

Daily Balance Futures 5-22-12

 

Until next time,