FB (Facebook Inc) exceeded the suggested stop over 121.25 yesterday for a 6.1% loss but will likely be added back as a new short trade soon. In fact, the stock even offers an objective short entry or add-on here on this rejection following yesterday’s backtest of the large rising wedge pattern. As with AMZN, which is also scheduled to report earnings next week, I am considering adding FB back as an official but aggressive new short trade in anticipation of an earnings induced selloff as more often than not, the next major direction following a company’s earnings release is already reflected in the charts. More often than not is far from always & I am referring to clearly bullish or bearish chart patterns such as this one.
FB daily July 21st
As with the AMZN short trade, I kept the stops relatively tight on Facebook relative to the downside potential in the stock over the next several months+, should the charts ultimately play out as I expect they will. For those still short or interested in taking a starter position ahead of earnings, FB is scheduled to report next Wednesday, July 27th after the market close. By starter position, I’m referring to a fractional position such as a 1/3rd to 1/2 position size which will help to mitigate losses, should the stock rise sharply on their earnings report & forward guidance, while also making it more favorable to add to the position vs. shorting a full position, should the stock gap down sharply on the morning of the 28th. As always, DYODD & only consider trades that mesh with your unique trading style & risk tolerance.