Social networking website Facebook (FB) celebrates the one-year anniversary of its initial public offering this week.
On May 18, 2012, the company sold shares to the public at $38 per share, and the time had a valuation larger than Walt Disney (DIS), among other large companies. Fast-forward 12 months, and Facebook stock now trades roughly 30% below its IPO price and more than 40% below its intraday high print from May 18, 2012.
The stock had more swings than a playground in the first year of trading. But for those seeking a great entry point for a longer-term position, right now, it doesn’t offer much.
In fact, the stock is in no-man’s land.
After sliding lower for the first three-and-a-half months of trading, Facebook found bottom in early September, which was confirmed with a higher low in October and finally a higher high in November. The stock then powered higher along with the rest of the market, rallying 32% from Nov. 26 until it found horizontal resistance on Jan. 28 near $32.50, which acted as an area of resistance in May and June, and still does to this day.
The other key lateral level to watch lies around the $24.50 mark (red dotted line), which acted as resistance until the Nov. 28 breakout, and ever since turned into support. In late March, FB tested the $24.50 area, from which it proceeded to bounce. That bounce has been sloppy and choppy, yet it did manage to define a new pattern on the chart: a downtrending channel (blue parallel lines), which in this case might be defined as a bull flag. If you are unfamiliar with the pattern, this type of formation usually resolves to the upside.
Either way, the bottom line is that as mentioned above, Facebook currently sits in no-man’s land. To yours truly, a real long-side entry likely wouldn’t be interesting at this point unless the stock can close above the early May reaction highs near $29, and thus on a breakout of the bull flag formation.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.