Chart of the Day – $FB ‘s Voluminous Gains

by Enis September 20, 2013 10:54 am • Commentary

Facebook’s advance over the last 3 months has been remarkable.  The stock has more than doubled since its June 6th low.  But it’s not just the stock’s move that has been impressive.  The volume that has accompanied this advance has been incredible too.

The attached chart pairs the daily price move with that day’s volume on the lower panel:
FB daily, volume on lower panel, Courtesy of Bloomberg
FB daily, volume on lower panel, Courtesy of Bloomberg
Almost every single major volume bar in the past 6 months has been on a day when FB has closed higher (all circled in green).  The consistent nature of such action suggests persistent institutional demand for Facebook stock.  The stock’s massive gap after earnings was actually followed by 2 more big buy bars within the next 3 days, another indication of insatiable demand.  So even though the stock has already doubled, the volume pattern suggests that any dip in the stock will likely be bought.
The stock is currently very extended (about 60% above its 200 day moving average), so the entry point is not at a spot where I would be interested.  But on FB’s first move down to near its rising 50 day moving average, I would look for a favorable bullish structure.