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Contrarian daytrading technician who specializes in micro scalping of stocks (using 1 minute bar charts), swing trading of stocks overnight, weekly stock option premium selling, pre-market and post-market psuedo market maker and stealth trading activity, and selling commodity option strangles... More
  • My Take On Social Media Stocks: FB, TWTR, ANGI, WB, SOCL  4 comments
    Apr 28, 2014 8:34 PM | about stocks: FB, TWTR, ANGI, WB, SOCL

    Facebook (NASDAQ:FB) Has Corrected Into Support From $52 To $55

    (click to enlarge)

    Looking at the daily chart of Facebook (FB) starting from the left side of the page, one will notice that the stock rallied nicely until it hit resistance of $51 and then $55 in October 2013. After a consolidation period of nearly 6 weeks, FB rallied to a new high of $58 in December 2013. Another 6 week consolidation then ensued, where FB traded between $52 to $58 before exploding to new highs towards $62 on 1/30/14, right after blowout earnings were announced. The gap from $53.53 to $62 has yet to be completely filled. With those great 4th quarter earnings announced in January 2014, Facebook continued to rally until topping out at $72.59. From that high nearly 9 weeks ago, FB has stayed above $55 until today when it hit $54.66. But even today the stock rallied to close at $56.14, safely above $55. With $55 providing solid support for over a month, and the additional support being the bottom of the gap at $53.53, it would appear that we are in an excellent support zone to buy some FB stock for anyone so inclined. There is even more support at the $52.50 to $53 area, if the gap is eventually filled. The MACD shown at the bottom of the chart, turned up, going into the 4/23/14 earnings report. Even though the results were fabulous, this time FB fell for three days post earnings. Regardless of what Twitter does after it reports tomorrow, 4/29/14, I feel Facebook should still bottom this week. I would consider any movement in FB below $55 a gift.

    Any Bearish Reaction To Twitter Earnings Should Probably Be Bought

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    Unlike Facebook, when Twitter (NYSE:TWTR) announced their 4th quarter 2013 earnings back in February, the stock gapped down rather than up. From a pre-report close of $65.97, the stock opened $15.36 lower at $50.61, leaving a large gap that was has never been completely filled. When the stock rallied to as high as $58.98, TWTR filled only 54.5% of the gap, just over halfway. The stock has now been down 10 of the last 11 weeks, and has slipped again today, the first day of the 12th week. I don't know what earnings will bring after the close tomorrow, but surely much of any bearish news has been factored in with the recent move down to the $40 support area. If TWTR does gap down after earnings, I plan to buy into that weakness to play for another filling of the gap. The expectations were high back in February and those hopes were dashed. However this time the expectations are much lower, and I don't believe TWTR will have too much of a bearish reaction, if it does fall post earnings. I will be flat going into the TWTR earnings report, but I am hopeful the stock trades well post earnings, as the company has a great incentive to try and support the stock with the expiration of the lockup next week. From whatever low TWTR hits post earnings, I expect to see a rally of $8 to $12 within the next few weeks, regardless of the earnings, based merely on the fact the stock has traded so weakly going into earnings. If the earnings report is pathetically bad, TWTR could quickly drop to $35 where I expect it would find support, for a move back towards last weeks high around $47. If $37 holds the bottom, TWTR could rally soon towards $49.50. If TWTR would gap up on an excellent earnings report, it could reach $52.50 or higher in the short term.

    In looking at several momentum stock charts this past weekend, like Tesla Motors (NASDAQ:TSLA), I concluded that the momentum stocks should form a significant bottom between Monday 4/28/14, and Monday 5/05/14. After watching today's action, I am more convinced than ever that a tradable bottom should be found within the week. Facebook and Twitter are both highly regarded momentum stocks that should bottom shortly.

    Angie's List (NASDAQ:ANGI) Appears To Be A Screaming Buy

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    The last bar of the above weekly chart of Angie's List (ANGI) only includes one day of price action (today's) rather than the normal five. But I wanted to show the weekly chart going back to when ANGI began trading in November 2011. I was bullish going into earnings that were reported on 4/23/14, check out my last article here, where I recommended buying the stock around $12. That trade would have worked out fine since the stock closed at $12.82 going into the 4/23 earnings report. ANGI blew out earnings expectations just like TWTR, and gapped up to $14.54 on the opening last Thursday. However, it quickly topped out at $14.65 and fell throughout the day. By the close the stock was barely up and settled near the lows. Then on Friday selling continued and ANGI closed below $12. Then today ANGI hit a new 52 week low of $10.56. With the blowout earnings report, it is surprising that ANGI would fall back below $12, let alone make a new 52 week low just 3 days later. I am lost for words. I was bullish at $12 and below a month ago, and even more so today, despite the current selloff.

    The indiscriminate selling going on now in the social media stocks is surely fund related, and ignores improving fundamentals. If I was a conspiracy theorist (which I am not), I would call the move a shining example of market manipulation. A week ago, Jim Cramer from Mad Money fame, talked about investment banks having the ability to circumvent the lockup rules, by making a basket of like stocks that Twitter holders can short to protect themselves from the expected weakness coming up when the share lockup ends. Could this be what happened? ANGI would be on that "sell list", and being a smaller company, it could easily be overwhelmed by TWTR related sell orders as the number of TWTR shares being released in the lockup is monstrous. If I am correct then the current selloff is not justified, and should turn around soon. I have to say that I was caught off guard this time by the relentless selling, but I will not be caught off guard again.

    Weibo (NASDAQ:WB) Has Had A Morning Pop Every Day Since It Started Trading Seven Days Ago

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    I carried this stock home with me every day from the first day it started trading. Every day I have bought or added to my position in the Chinese Twitter stock Weibo (WB) on the close, only to sell out at a profit in the next day's premarket. If the stock was popping at higher prices, it should pop even more from lower prices. China stocks have been weak across the board recently, to include SINA (major owner of WB) and NQ. With four straight down closes in Weibo (WB), one would think that this stock would stabilize soon.

    This Is The 8th Week Of A Down Trend In The Social Media ETF (NASDAQ:SOCL) So It Should Bottom This Week If History Is A Guide

    (click to enlarge)

    The above weekly chart of the Social Media Stock ETF (SOCL) is shown above, going back to its beginning in November 2011. If you look at the beginning of the chart, on the left hand side, it made its first major bottom in its 8th week of trading, at $12.50. After rallying to $16, it then went sideways for a couple months before starting a selloff that bottomed again in the 8th week at $12.16. From the next high of $14 hit a month later, SOCL had another 8 week downturn to $11.84. After a 2 week rally to $14.13, it then fell for 9 weeks to its all-time low of $11.81. After a 3 month rally to $14.49, SOCL completed a 7 week downturn to the mid-$13s. Another one month rally to just above $15, it then bottomed again on the 8th week of a downturn, at $14.00 in June 2013. From that major low the ETF would continue moving up to its all-time high of $23.00 the first week of March, 2014. Counting from that high, this week is the 8th week, and exactly when one would expect to see a bottom again. The last bar only includes one day of action (today) rather than the usual 5 days, as I am writing this on a Monday.


    You can see that both in time and in price, we are due for a bottom in the social media space this week.


    The thoughts and opinions in this article, along with all stock talk posts made by Robert Edwards, are my own. I am merely giving my interpretation of market moves as I see them. I am sharing what I am doing in my own trading. Sometimes I am correct, while other times I am wrong. They are not trading recommendations, but just another opinion that one may consider as one does their own due diligence.

    Disclosure: I am long ANGI, WB.

    Stocks: FB, TWTR, ANGI, WB, SOCL
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  • Robert Edwards
    , contributor
    Comments (587) | Send Message
    Author’s reply » Someone contacted me because they recently bought TRIP and FB, and they were down 10% within a week and wondering if they should panic. I am posting my response now for all to see, in case there are others in like panic mode. Here was my response:


    Over 34 years of investing, my number one rule is to never, ever, ever sell in a panic. If you do that, you will be a guaranteed loser. You need to realize that any losses on your investments right now are only paper losses and not real losses unless you panic and sell.


    I never sell unless the thesis changes. Is Facebook a worse or better stock since you bought it? I would say with the good earnings report, it is a better stock now than it was the day you bought originally. That being the case, I would not sell Facebook at a loss. If you do then you will probably jump into another stock and that one becomes a loser too. In the future, buy only 1/4 to 1/3 of your position when you buy and then add on weakness (be a scale buyer). Then you look forward to drops in the stock price as you get to add at a discount.


    How long was the money sitting in the bank? A couple months? No, probably a few years. Well, give Facebook a chance too, even if you have to wait a year or two. Unless there is a medical emergency or some other reason you need the cash fast, then just sit back and be patient and wait for a better day to sell out.


    You did not buy the very top price of Facebook or TRIP. Your timing was just unlucky. You bought at a good price instead of a great price. But you still bought at a good price, a price that can make you money in the longer term, like in the next 2 or 3 months or longer. I have purchased stocks in the midst of a major downturn where I bought the stock 20 to 50% lower than the all-time high. However, I was very unlucky and the stock cut in half after I bought it. In a few rare cases, I lost 75 to 80% of my original investment, if I would have panicked and sold at the bottom. But because I held firm, I got my money back 100%. FB is the leader of social media and the one stock you want to be patient with. Because you have so much FB, it should protect your TRIP shares. If you would long-term lose half your money in TRIP, you could still not be a loser long-term as Facebook could easily double from what you paid for it.


    I hope this has been helpful. We are in a momentum stock selloff that is scaring out those with weak hands. If you have weak hands you will lose. The strong survive. Just be strong and you should be fine. In the future we can talk about ways you can improve, like not buying all shares at once, at one price. But that is done. Now, you need to learn how to stand your position.


    One trick is to create a win/win position. Stand firm till we get a rally.
    On a rally in FB and TRIP, you can sell out of half your position in each at a smaller loss than you have now. Then keep the money in cash to buy back when they hit their lows again, allowing you to average down your position. If the stock never gets cheap again, then just ride up the shares you already own to a level that pays you back your loss. Once you have sold out half your position, you are happy for a down move to buy shares back cheaper to average down your break even. You are happy for a rally as well, as it lowers the loss on the remaining shares.


    Buying TRIP and FB you bought two stocks that are in the same field. Check out Jim Cramer with MAD MONEY. He always says buy 5 unrelated companies. When you buy in same sector your losses are magnified causing undue stress.
    28 Apr 2014, 10:01 PM Reply Like
  • zaw77
    , contributor
    Comments (54) | Send Message
    Hello Robert, I own ANGI with avg. $11.47, want to keep it to the next earnings report, so will add on weakness. I made with WB a nice profit $0.79 per share yesterday, and will buy again we should retest $17.


    Thank you. I appreciate you share your knowledge and ideas here.
    29 Apr 2014, 02:55 AM Reply Like
  • Robert Edwards
    , contributor
    Comments (587) | Send Message
    Author’s reply » Earnings are out and TWTR did about what was expected. After making a few scalps, loaded up on TWTR shares in the 38.40's and bot more inventory 38.10 and a bit lower, to sell out in premarket tomorrow, Wednesday. I am bullish TWTR 38.50 and lower and bearish 49.50 and higher. Look for bottom to be 37 or 38 and $12 pop from the low.
    29 Apr 2014, 06:01 PM Reply Like
  • bexpo
    , contributor
    Comments (256) | Send Message
    You are the BEST! Thanks for all the info.
    1 May 2014, 11:44 AM Reply Like
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