Can Facebook Surge Like Other Social Media Stocks on Earnings?

Facebook will report earnings on Thursday following results from a number of its social media peers. Here's the trade.
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We’re in the thick of earnings season and Thursday will have its share of fireworks. After the close of trading, we’ll hear from Facebook  (FB) - Get Report, which is up more than 5% on the day.

Those gains come after Pinterest  (PINS) - Get Report reported blowout earnings, sending shares higher by about 40% at one point on Thursday.

Further, Snap  (SNAP) - Get Report still boasts big gains from its earnings rally last week. Will Facebook be next to join the party? That’s what bulls are hoping for as they bid Facebook higher.

It’s worth mentioning that Facebook will report alongside Amazon  (AMZN) - Get Report, Apple  (AAPL) - Get Report and Alphabet  (GOOGL) - Get Report  (GOOG) - Get Report on Thursday evening.

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Trading Facebook

Daily chart of Facebook stock.

Daily chart of Facebook stock.

I am surprised it took Facebook stock this long to rally. With the rest of the social media space up notably, it’s going to be a surprise if Facebook’s numbers aren’t strong.

Wednesday’s decline was an ugly one. Shares fell 5.5% and barely closed above the lows. Facebook stock also broke below the 50-day moving average amid that decline.

However, it’s now snapping back to the upside, as it starts to press into the $285 resistance level ahead of earnings. If the reaction is bullish, look for a move over $285 and for a test into the $300 to $304 range.

In late August and early September, Facebook twice tried to push through this area. It couldn’t do so though, pulling back to the $250 area.

Bulls would like to see Facebook stock retest this resistance area, but they would love to see shares break out over it. If it does, the two-times range extension near $311 becomes the next upside target.

At this point — with Snap and Pinterest showing strong post-earnings gains — it would be rather disappointing to see Facebook report a lackluster quarter.

If it does though, keep an eye on this week’s low. If shares close below $267.26, Facebook stock will have lost the 50-day moving average and uptrend support (blue line).

That will leave its 100-day moving average in play, as well as its recent support range in the $247 to $250 area.