Facebook (FB) stages strong recovery near record highs as big tech recovers thanks to Fed doves

Facebook shares have recovered along with most big tech names recently as the Nasdaq plays catch up to the broader market. The Fed's continuing reissuing of the mantra that all inflation is transitory has helped technology and high growth names to recover. Facebook has taken the lead and bounced strongly from the $300 zone. All big tech companies reported strong Q1 2021 earnings numbers, but most have slipped back post the earnings releases. Many retraced to areas of strong support and look to have invoked the buy the dip mantra to recover. Facebook is poised near record highs of $331.81 from April. Facebook finished Tuesday up just under 1% at $327.79.

Facebook has hit the headlines on Wednesday as several news outlets report that EU antitrust regulators may begin an investigation into Facebook's online marketplace. While the news is not confirmed and any results unknown and unclear, the recent bullish sentiment toward Facebook has pushed the shares near record highs, so Wednesday's reaction will be key. Separately, big tech and news companies may face challenges from a new code of practice to be issued by the European Commission. "Disinformation cannot remain a source of revenue. We need to see stronger commitments by online platforms, the entire advertising ecosystem and networks of fact-checkers," EU industry chief Thierry Breton said in a statement. Vera Jourova, Commission Vice President for Values & Transparency, said the issue was in urgent need of attention. "A new stronger code is necessary as we need online platforms and other players to address the systemic risks of their services and algorithmic amplification, stop policing themselves alone and stop allowing them to make money on disinformation, while fully preserving the freedom of speech," she told Reuters. The original code was introduced in 2018. Facebook was one of the signatories to the code along with several other big tech companies as well as advertising, tech lobby groups and other tech companies, according to Reuters. 

Facebook stock forecast

FB shares gapped up initially after a strong earnings release on April 28. Earnings per share reported at $3.30 versus a consensus estimate for $2.35, a 40% beat. Facebook shares rallied 7% post the release and created a nice gap on the chart. As often happens, the gap needed to be filled, and FB shares duly obliged, retracing the entire gain by May 10. The Relative Strength Index (RSI) and the Commodity Channel Index (CCI) both signalled the sell-off with both momentum oscillators entering overbought territory, highlighted. Facebook did find support just around the $300 level and has formed a tentative bullish channel formation. The key is to remain above the 9-day moving average at $318. A break of this would likely see a retracement to support at $303.67 and trend line support at $306, as well as the lower trend line at $299. Once again it is showing a strong support zone around $300. There is nothing too strong or high conviction around current levels. The RSI and CCI are trending with price and in neutral zones, the Moving Average Convergence Divergence (MACD) did give a crossover buy signal on Monday, but nothing else confirmed this. Indicators are far from perfect, so if one gives a signal it is always preferable to have confirmation from another indicator.