An update on our current Facebook Stock Predictor buy signal:    Our commentary on September 16 had a technical target price of $47, and the stock reached this price in a powerful move last Friday.

On Monday, September 16 we wrote:

1.  We have a price target of $47/share which we have calculated using technical methods.  This is a guide line based on probabilities, and the market can ultimately do whatever it wants, but in our experience just when you think a stock can’t go any higher it smashes through the roof.

2.  The proprietary indicator on our algorithm is still showing bullish strength and is suggesting additional gains.

In terms of locking in profit, we prefer to cash in some of our gains here rather than wait for that last bit of upside to reach our target price (which may or may not materialize before the next algorithmic sell signal)…  like a professional surfer knowing when to bail before crashing into the shore, getting the maximum ride out of a wave.

There is no doubt many investors have a similar price target, reducing at least some of their position at the $47 handle, and no one would fault you for doing the same if you are long.   But our algorithm has different ideas…

Over the weekend we re-ran and optimized the algorithm under several different conditions, wondering if perhaps a stronger pattern has emerged which would indicate the start of a down trend, but our tests indicated that the current up-trend is still alive and well and is showing no signs of weakening on a daily time frame according to our proprietary indicator.

We can’t believe it ourselves, but it appears as if Facebook could be poised for another leg up.  There could be many reasons for this, some of them fundamental, some of them technical, and some of them downright manipulative, but we are not ones to judge.  The stock might consolidate or pull back before moving higher (which our private client intraday algorithms will capture), but the patterns we are seeing are quite prominent throughout the brief history of the stock, which leaves us little reason to reduce our our long position.

To re-iterate our stance from our September 16 post:

Shorting:  We’ve learned never to short while our algorithm is long, so we’ll just wait for the next signal before doing that.

Exiting:  If the algorithm generates a SELL signal, we would exit the long position entirely.

 This is our current position until the algorithm indicates otherwise.