Facebook shares plummeted Monday, breaking below a key psychological and technical level, and now it faces a bigger test.
The stock fell hard after weekend reports that a political data analytics firm gained access to data on 50 million Facebook users. Analysts said the stock was holding above the lows of its recent trading range but it is testing the 200-day moving average.
Down more than 7 percent at midday, Facebook was trading just below the 200-day level — $172.50 — and how it trades there will be important. The next level technicians were watching was the recent low of $167.
The 200-day is a widely watched technical indicator, used to follow price trends. It simply represents the average closing price over the past 200 trading days. The stock last closed below the 200-day in January 2017.
“It is gapping down. That’s never a good sign for a big growth stock,” said Robert Sluymer, technical analyst at Fundstrat. “It’s key to see how it reacts to its 200-day and the lows that were in place. … It’s premature to make a statement that there’s a top in Facebook. It’s just really returning to the low end of a support band it’s been in since October.”
Sluymer said he’s watching the upper $160s range, and if it breaks that it could fall back toward $155. He said the 200-day was important but he’s more concerned about the recent lows.
“It’s a psychological level for people. It took it out. Let’s see where it closes at the end of the day,” he said. Sluymer said the stock has visited the high $160s a number of times — in October, November and in February, when it hit a low of $167 as the market sold off. If it fails to hold that low end of the range, it risks breaking its uptrend, he said.