Facebook update

In this post I correctly modeled the timing on re-entry of FB short positions.  However, I did not expect a triangle to form here.  Longer term, it's good news for FB gamblers but short-mid term it is screaming that massive pain is about to hit.

The model below assumes that the C wave will be about the same length as the a wave.  That would take it to the level of the prior 4th.  This is best case IMO and we will know by the length of the coming first wave down how likely this scenario is going to be.

It should be known that ending diagonals are also known for retracing their entire length.  In other words, FB shares could turn out to be a mania.  This would not surprise me at all.  But for shorting purposes, the safe bet is to assume a normal a-b-c movement back to around $40.

Zooming in for more detail, it looks to me like the B wave has completed and that the breakdown is already in the very early stages.  The confirmation is the break below the lower rail.  Again, best case is a 30% haircut from here and if I see 5 clear waves down that stop there then as much as I think FB is a waste of time, I will have to call it a buy.  Why?  Because that would suggest that it is a 2nd wave in the bigger picture and that a large 3rd wave up could be coming.  This makes no sense to me at this point given what an economic waste the whole facebook concept is but perhaps it suggests that Zuckerberg will expand into the wide open spaces of cloud based AI - something that I think the world is just begging for.  If he goes there, and his recent purchase of an AI think tank suggests that this is his future direction, then FB could explode upwards because cloud AI is wide open, has no competitors or products right now and FB could get the first mover advantage.  Google had years to capitalize on this but just didn't seem to have the vision to do much of ECONOMIC VALUE past web search. 

In any case, wild speculation aside, FB is a SELL SELL SELL right here.

Important note: If the chart goes up one more wave then the B wave triangle model is in serious jeopardy because that would be 5 waves up from what I modeled as "d", and the "e" wave is only supposed to be 3 waves (5-3-5).  In the very short term it would mean that the shares could rally back to $64 (level of the prior 4th) but then that would be wave 2, not wave B.  The implications are that the $40 price level would no longer be the primary model and in that case I would start to give odds to FB becoming a mania stock, retracing all of its gains.

Final thought:  If FB is retracing even back to $40, what will the rest of the markets be doing, just sitting there?  I think not.  If FB is going down, everyone will likely be going down.  In fact, it's likely the other way around.  If the broader markets go into massive decline, FB will get sucked down with the rest of the stocks.