Facebook & NDX Technical Outlook
- Facebook (Meta?) inventory takes enormous hit on earnings
- Gap-down may spark post-earnings drift
- Nasdaq 100 in a precarious spot after large technical set off
Facebook (FB, Meta) and NDX Technical Outlook Following Big Earnings Hit
Facebook (FB), or ‘Meta’ (the brand new father or mother firm title), took a large hit in a single day on its earnings miss. The inventory is down over 20% in pre-market buying and selling on quite a lot of points with its quarterly earnings and future outlook.
I’m not going to enter all of the messy particulars of precisely why Wall St. is reacting the way in which it’s, I believe all we have to know is that it’s reacting in an enormous approach and that forms of gaps don’t occur with out an abundance of sellers heading for the exit on a usually incorrect view.
Facebook’s inventory has been on this place earlier than. Back in 2018, FB misplaced almost 19% following an earnings miss. The most fascinating half concerning the occasion then was that it got here after a robust run and near a file excessive the day of its earnings announcement. The market was clearly not positioned for a miss.
This time, it’s a little completely different. FB topped in September and has been usually weaker than the broader market, suggesting that there was at the very least some stage of concern about the way forward for Meta, even when solely within the intermediate-term.
Nevertheless, gaps of this measurement in opposition to the first development, whether or not from useless highs or comparatively near them, present that a lot of market individuals are leaning the incorrect approach. This considerably will increase the chances that we see a post-earnings drift decrease.
In 2018, that is precisely what occurred the months following the shock launch. After the one-day gouge, the inventory declined about one other 30% earlier than finally bottoming. It seems the danger of an analogous destiny is in retailer for FB this go round. Maybe it falls extra this time, possibly much less, however in an occasion the bias is in the direction of shorts over the approaching weeks and months.
FB is seeking to open round strong assist close to 250 created throughout 2020/2021, so this may occasionally present an preliminary flooring. A breaking of assist, whether or not it comes immediately or after a bounce, may assist with timing the above situation. There is a trend-line relationship to 2013 that runs as much as underneath 200 that may very well be the primary spot of actual assist as soon as rapid assist is taken out.
FB Daily Chart
FB Chart by TradingView
The Nasdaq 100 just lately snapped a bullish channel relationship to September 2020, placing it in place to unload much more. We are presently seeing some power out of the market after reaching oversold situations.
Just a bounce or a renewed leg larger within the bull market? The considering is that danger is kind of excessive we’re in for at the very least one other leg decrease over the subsequent few weeks. If the NDX can’t recuperate the channel by climbing above the decrease channel line, then on the lookout for a decline to start quickly.
The transfer off the latest low has the potential to publish the proper shoulder of a would-be ‘head-and-shoulders’ sample. We have the opposite two elements (left shoulder & head), however might want to not solely see a proper shoulder develop however then the neckline break. The breaking of the neckline is crucial piece of affirmation for an H&S sample.
From a tactical standpoint, a take a look at of the decrease trend-line may provide up a strong danger/reward entry for shorts or bearish choices methods, akin to shopping for places or put spreads. A confirmed break of the neckline (a long way decrease) would agency up the notion that we’re heading effectively into bear market territory. More on that later if it turns into related…
Nasdaq 100 Daily Chart
Nasdaq 100 Chart by TradingView
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—Written by Paul Robinson, Market Analyst
You can observe Paul on Twitter at @PaulRobinsonFX
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