Saturday, January 30, 2016

[FB] update

Long time readers know that I have no respect for the long term business model of Facebook.  I think most social media has little if any value and that Facebook is viewed by young people as something for old people.  Might as well call it ParentsBook.  But of course none of that matters for anything.  The only thing that matters is the chart and the chart says that Facebook stock is rapidly headed toward a major 5th wave peak after which time it's best case bottom is likely $72 and it well could be more like $55 (the 61.8 fib).  Additionally, FB could simply turn out to become a mania.

To say that I am pretty much alone in predicting this goes without saying.  All you have to do is look at the chart.  Gamblers are going ga-ga over this useless company.  So what if it has a trailing (i.e. real) PE of 87.  So what if PS is 17 or that PB is 7.  None of that matters anymore because FB is part of the new economy.  You know, the one where oil is worthless and selfies are everything.  What a joke.

OK, so maybe you think that a $317 billion dollar market cap is a joke for this company as well.  But it's just seems to pump higher and higher.  So when will the insanity end?

Well nobody knows the future with certainty but my primary model for this is to rally a bit more into next week and either kiss the upper rail and deflect downward or break through it to a blow off top in the $120-$125 range.  It is now in the final stages of "train is leaving the station" panic buying and so the finish has to occur quickly because any loss of momentum here will give buyers a chance to think and to behave rationally.   Instead, the market typically waits until the last emotional idiot sucker comes aboard before running out of steam and reversing down hard, trapping many in the shares who are too emotional to use stops.

When this goes into collapse mode it is likely to do so with a slope which is much steeper downward than the upward slope of the big run up has been.

Stair steps up, elevator down.

No comments:

Twitter Delicious Facebook Digg Stumbleupon Favorites More