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5 Stocks to Buy Instead of Facebook

Groupon

We can't talk momentum IPOs without bringing up Groupon (GRPN), a stock that's had a pretty dramatic fall from grace in the last few months. Shares are down around 50% since the start of the year.

Groupon's selling isn't showing any signs of abating. In fact, the downtrend accelerated back at the start of April. Shares have found support a few times during the downtrend, but it hasn't been particularly strong. Instead, those breaks of support have merely been good entry points for short sellers.

The most recent support level was put in yesterday at $10, solidified by a candlestick pattern called a piercing line. The bullishness is only a short-term signal, though. A break of $10 support is a solid short signal for Groupon.

Some traders may have noticed that RSI is looking oversold right now. While oversold generally makes people think that a correction is in store, the fact of the matter is that statistically, oversold stocks are more likely to become more oversold in the short-term than they are to reverse.

Whatever you do, don't try to be contrarian and buying this falling knife in the longer-term.

To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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Stock quotes in this article: FB, LNKD, Z, P, ZNGA, GRPN 
At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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