We noted Facebook’s bearish formation last week, which triggered today and then quickly reversed (see chart). Whoever said this is an easy business!
We’re also watching and waiting to see if the head and shoulders formation triggers in the global social media index (SOCL). Social media stocks showed leadership in this year’s stellar market ramp, up almost 50 percent on the year, but are now struggling and seem to be topping. Not surprising given the recent Twitter IPO may mark the top.
A break of SOCL’s neckline at 18.38-18.48 with follow-through sets up a measured move down to 15.81. Be careful of the low volume, however, as the 20-day moving average volume is only about 250k shares.
(click here if charts are not observable)