Facebook: Finding Technical Support?

04/25/2017 2:48 am EST

Focus: STOCKS

Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Continue playing things a bit cautiously. Our Cabot Tides turned negative last week, though we didn’t take any action in the Model Portfolio as we already had 29% in cash, explains Mike Cintolo, editor of Cabot Top Ten Trader.

We’ve seen a modest bounce this week, and with our Cabot Trend Lines and Two-Second Indicator still positive, we think the next big move is up. But until we get a new Tides buy signal, we’re holding some cash and taking things on a stock-by-stock basis.

In most cases, the first pullback or shakeout after a persistent advance (one where the stock rises in a nearly straight line for many weeks) is buyable, and Facebook (FB) looks like a good example — shares dipped a few points last week but found support near their 10-week line and have quickly bounced back toward their highs.

There have been some encouraging news items from the company’s F8 development conference, including a new social virtual reality tool and continued focus on Messenger “bots” that will form the basis of many companies’ interactions with customers on that platform.

That said, a lot will come down to how earnings (due out May 3) are received, but 11 months of no progress last year, we’re thinking FB has resumed its longer-term uptrend. BUY.

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