For those following The Facebook Stock Predictor you know it hasn’t let you down. You also know that this algorithm has held a long position for nearly 4 months, riding the trend above Facebook’s initial offering price and 116% gain on the trade.

As we said before, we launched the Stock Predictor to help investors and to showcase our predictive trading technology at the same time, but little did we know that the stock would rise to its current levels. With Facebook’s earnings multiples above the norm, it would have been easy to be a skeptic and go short the stock, but our computers kept us in the trade and provided the basis for making some bold bullish calls along the way.

Today (Oct. 22), the algorithm finally generated a new HOLD signal. After confirming the signal we notified our email list members immediately, and our team compiled an analysis of what should come next.

 

 

To be clear, a HOLD signal means that the algorithm has exited its long FB position entirely, and it is not buying or selling into any new position. This typically means that the market conditions are not conducive to generating a clear positive or negative signal.

From here the next signal could be a Buy or a Sell, or the algorithm could hold flat until market conditions change.

Our own analysis shows that Facebook’s price may have reached a pinnacle. The net-new institutional holdings are anemic, and the market as a whole has been experiencing volatility. Correlations to the NASDAQ index are breaking down, and we are seeing green shoots in other beaten down assets like Gold.

In our opinion, if the music is going to stop playing for major indices, now would be a good time. Stocks and investor euphoria is at an all time high. Trillions of dollars are managed by entities large enough to move markets, and for these entities to shift capital around they need nose-bleed levels like this to exist to avoid collapsing the value of their own assets as they exit them. In short, at the turn of each cycle, someone needs to end up ‘holding the bag’ and usually it is the small investor.

As far as Facebook is concerned, stay tuned to the Stock Predictor for the next signal. We are confident in its ability to guide.

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