(By Rich Beiglmeier)
Mike from NY, NY asks us about Facebook, Inc. (FB).
It's a question on a lot of FB owners' minds. How many investors are going to defriend the stock? In case you don't know, Morgan Stanley cut their outlook on the company's revenue and earnings outlook prior to the IPO, drastically by one second-third hand account.
From what we understand, Morgan Stanley only shared the info with large institutional investors. That's beyond shifty and only solidifies the opinion that Wall Street is full of bloodsuckers. iStock followed the IPO closely, and this is the first we have heard of it.
With such a limited trading history, and unknown fundamentals as the "new" numbers aren't public yet, it's hard to get a grip on what FB shares might do going forward. So, we will work with what we have.
The stock hit an intraday low of $30.98. For now, that's the bottom as the stock pivoted there. If you are thinking about buying it, then you must watch $30.50 to $30 like a hawk. With absolutely no support below, the stock could free fall, and that's before non-institutional investors can "short" the stock. They aren't supposed to short for 30 days, but can do so in a market making situation. It's all nonsense anyway, because the big guys find ways around everything.
As for upside, FB has two opening, gap downs to close before it can charge up the mountain. iStock would like to see a close above Monday's close of $34.03 before getting involved. Then, the stock can work its way back to Friday's close of $38.23, closing he Friday to Monday gap down of $1.70.
Once the stock closes above 42.05, it has a chance to go. A close above $45, and it's odds of rising increase dramatically. iStock suspects that when Facebook announces an acquisition to monetize their wireless presence, that will be the catalyst which get the hamster to spin the buy wheel.
Gerald asks for our opinion on Tata Motors Ltd. (TTM) please?
The sector chart for autos is hinting at underperformance relative to the S&P in the next few weeks to months. If the overall sector is cut, it will be hard for any auto stock not to bleed.
On its chart, TTM is suspended in no-man's-land as it didn't stop and reverse on support. If the market lets out some more gains, iStock feels there is a solid chance the price could come to its rising 200-day average of $21.54. Twenty-two dollars could be the number by the time the two meet.
On the way up, TTM could struggle with $25, the opening price following a gap down on May 15th. If Tata manages to cha-cha past $25, it could really struggle with $26, as it was a multiple price support level for the stock since February; tough to break on the way down equals tough to break on the way up.
From our fundamental perspective, the company is pricey.