For the smart guys out there, the most significant events of the week were fairly obvious – the EU lowering their growth forecast for the entire union, an unexpected rate cut by the ECB and the very unexpected positive surprise on non-farm payrolls here in the U.S. But for some reason, while I find all that fancy macro stuff interesting, I admittedly couldn’t keep my eyes off of TWTR, FB and TSLA.
Since TSLA made an all-time high on Sept 30th of $194.50, and since then has made a series of lower highs and lower lows that culminated this week with significant gap lower on big volume, on fundamental news. The 6 month chart below shows what is in hindsight a textbook head and shoulders top formation, with $160 serving as the neckline. For some technicians the biggest tell might have been the multiple closes at the end of Oct below the important short term momentum indicator, the 50 day moving avg (purple).
Scrolling some charts of other high-fliers, a similar pattern in FB caught my eye, where the stock had a similar parabolic run in the last few months. The 6 month chart below in some ways resembles TSLA of late, consolidating below recent highs, seemingly making a similar head and shoulders pattern and now sitting right on the neckline, and importantly below the 50 day moving avg.
While there are few similarities btwn the 2 stocks, I am keeping a close eye on both as TSLA has been the poster-child for VERY speculative stocks year to date, while FB’s recent performance signals more mainstream investor interest at large cap growth at a reasonable price. I would be more inclined to take a shot at TSLA on the long-side on a near term oversold condition and possibly press the recent weakness in FB for the potential for a downside gap below support possibly on some fundamental news, similar to the situation in TSLA this week.