Tuesday, May 22, 2012

W2 or B?

The trend average was finally tested today and it seems like Wave 1 or A topped today at 1328 which is approximately 36 points from the 1292 bottom. And now we will see if we're in for a 5 wave move fairly soon. If this is a 5 wave move, we will see 1364 at a minimum when it is done. But if this ends up being an ABC move then the target level will be lower and we will see another strong bearish wave to test the 1292 low again. Seasonality doesn't really help the bullish case but then again markets have minds of their own, so we'll just have to wait and see how the first couple of legs evolve.

And how about them Facebook stocks? seems like it was a sucker's IPO, down 20% in couple of days. FB reminds me a lot of Yahoo (a former client of mine back in my Silicon Valley days) and America Online. At the height of the internet craze, these two stocks were gold but after failing to monetize traffic their valuations came down drastically. In AOL's case, they entered in possibly the worst larger merger in history and now they're barely around. And Yahoo is a mess waiting for someone to buy them out. So it will be interesting to see where FB will be in 10 years, for one I think they are better than my space (sold to Murdoch for $500 million in mid 2000's, then re-sold for $30 million recently). But they're not exactly google or amazon, so my guess is FB will probably end up where Yahoo is today eventually.. so a good potential short in the long run.

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