FACEBOOK BREAKS DOWN BELOW MA5/MA20 ON RATING DOWNGRADES & FUND SELLING
In the Premarket trading session on Thursday, Facebook stock was trading at 133.88- lower by 2.94% as compared to its previous close.
In recent news, financial services company, Stifel Nicolaus cut its rating on the stock to “hold” from “buy”. The company said that Facebook’s management team has created too many adversaries to avoid a long-term negative impact on its business.
According to market sources, worries about Facebook’s declining profit margins and battered reputation have prompted 93 U.S. mutual funds to completely sell out of their positions in the company so far this year, causing a roughly 35% decline in social media giant’s share price from its highs. The selling by fund firms including Putnam Investments, Fidelity Investments, and The Hartford combined for a total of nearly 12 million stocks. Facebook was rocked by disclosures earlier this year that the personal information of up to 87 million users may have been improperly shared with political consultancy Cambridge Analytica.
On the technical front, the current price is below the MA5 (139.03) and MA20 (140.04). The current price is below the middle line of the Bollinger Bands and is heading downwards. The stock is expected to open lower today.
Overall Bias is Negative and short-term trades can be initiated with tight Stop Loss and Profit targets.
TRADE SUGGESTION-LIMIT SELL AT 134.40 TAKE PROFIT AT 132.40 STOP LOSS AT 135.40