During May 2012 Facebook entered the Nasdaq by pricing its IPO at $38 per share. At the end of July 2012 Facebook share was traded at about $30, and today it is traded between $19 and $20. But why did Facebook share crashed like that? Is it because Goldman Sachs and other Institutional investors are selling their shares? No, the real reason for a 50% stock slump is based always upon fundamental factors. At the end of July Facebook reported a growth slowdown without even easing worries about future reports. But let's see some important fundamental figures about Facebook.

Some Important Facebook Figures

∟ Total Revenue and Net Income: Sales 4,33 billion USD, EBITA=1.07 billion USD and net income about 0.77 billion USD.

∟ Important Ratios, Price / Sales=9.3, Trailing P/E=67.06, Forward P/E=30.76, Price/Book=3.12

∟ Cash and Debt: Cash 10.2 billion USD and debt 0.7 billion USD

∟ Facebook Market Capitalization: 41.52 billion USD (in a Facebook share price of about $19.70)

(source: Yahoo Finance)

Facebook reminds us of the story of the .coms shares in the late '90s. High expectations and weak fundamentals sooner or later are forming great bubbles. So the Facebook bubble eventually has crashed. This means bad news for Facebook existing Investors but maybe it means a trading opportunity for the rest.

The 3rd Largest IPO in US history

Facebook's IPO raised $16 billion, and it was the 3d largest IPO in US history. The largest US IPO raised $19.7 billion (VISA) in 2008, and the second largest US IPO raised $18.1 billion (automaker General Motors) in 2010.

Read more: Trading Signal on Facebook Share 2012

INTRODUCING TCI INDICATOR FOR THE FIRST TIME IN THE WEB

Trading Center has developed an innovative technical analysis indicator named TIC.  TCI measures several daily price factors (high, low, close etc) and producing predictions upon the price trend of any traded financial asset. Today, using TCI we are going to identify Nasdaq Composite future price trend but most importantly the upcoming time frame. First comes a short analysis, after a time frame and the historical TCI chart for Nasdaq since 1998.

Our TCI -technical analysis indicator is presented today for the first time in the World Wide Web or anywhere else.

TCI on Nasdaq Composite

Today is late Sunday, the 6th of May 2012 -and we are going to test TCI on Nasdaq during the period 7th of May 2012 until the 15th of May 2012.

TCI suggests that the Correction Phase is expected to continue (Short term Sell/Hold)

Nasdaq Composite during the past months has been strong reaching 3,134 points intraday on March 27, 2012. The past weak a correction started and led Nasdaq at 2,956 points in the closing of Friday the 4th of May. This correction is expected to continue until the 15th of May 2012. Long term analysis of Nasdaq will be the subject of an upcoming analysis on Trading Center, today we focus only is short term. Using Trading Center index TCI we can design a time frame and set our two targets. 

►Low-1: May the 8th (after low-1 upward short correction)

►Low-2: May the 15th (after low-2 trend reversal to bullish trend)

Using these two targets we remain to sell/hold on Nasdaq until the 15th or 16th of May 2012. After we expect a strong rebound and the master trend to become bullish again. Remember that technical analysis can always be beaten by short-term surprising news so there is not such thing as safe prediction.

TCI CHART ON NASDAQ (15 YEARS)

Below TCI indicator is presented graphically for the period starting May 1998 and ending today, May, 6th 2012.

More technical analysis using TCI indicator is about to come in Trading Center. More indices will be evaluated in the next months..

TradingCenter (2012)

Dow Jones Industrial recently started a new short-term rally. The positive outcome of the Greek elections (17th of June) and the expectations that soon Eurozone will provide a permanent and stable solution to the problems of the European Banking Industry, turned investors bullish again. Dow Jones Industrial Average (DJIA) closed at 12,824.39 (June, 20th 2012) and now it is trading far above its recent intraday low of 12,003.75 points (June, 4th 2012).

TCI in Action: Implementing Trading Center Indicator on Dow Jones Industrial

In the following table, you may observe TCI in action. The point (A) indicates the starting point of the current DJIA rally (June, 11th 2012). At point (A) Dow closed at 12,411.23, above the Average Price of 180 days (12,403 points). This has been a confirmation that a short-term rally is on the way.

We have indicated the point (B) where Dow industrial is expected to reach a Middle Rally Top. The point (B) corresponds to 8 working days after the June, 20th of 2012, that means the July, 2nd 2012.

We have indicated the point (C) where Dow industrial is expected to end this short-term rally. The point (C) corresponds to 18 working days after the June, 20th of 2012, that means the July, 17th 2012.

Read more: Bullish Trend for Dow Jones Industrial

Dow Jones for 14,100 or for 12,000 ?

The Current Trend

Dow Jones Industrial is found today at 13.150. The long term trend is certainly bullish, as the US economy and corporate news are both looking well. Especially as long as unemployment is falling and technology is pushing the economy to grow more. Looking at the whole picture –it is very possible that Dow Industrial during 2012 will test its historical record of 14,164.53 (October, 9th, 2007). It shouldn’t be forgotten that Dow Industrial usually performs well during Election Years. Based on historical statistics, Dow performs well on the Election years and bad on the years after.

What could ruin this nice picture?

But what could really ruin this nice bullish picture? The real danger for the US economy and Dow Jones respectively is coming from the other side of the Atlantic. The European economy is very weak at the time, with zero growth and high unemployment. Moreover, the countries of the South (Spain, Greece, Italy, and Portugal) and also Ireland suffer from heavy deficits and are still considered very dangerous for capital lenders. These systemic fears are transformed into high-interest rates of government lending -which are also transformed into larger deficits. If we put all the pieces together we may conclude that things may get worse, especially as concerns the European Banks. This whole situation creates a major problem for the global economy and it will certainly jeopardize the future course of the American markets in 2012. If everything goes bad in 2012, Dow will probably test 12.000.

Read more: Dow Jones Trading Signal

Apple Stock (AAP) Price Correction

Recently the Apple’s stock (AAP) has suffered from heavy sales. The share price of Apple slumped from $644 some weeks ago to about $598 today. The rally that started at the end of 2011 has offered investors almost 100% as you can see in the chart below (yahoo finance). This price correction is considered absolutely rational especially if it doesn’t exceed 10% from the high price of $644. Apple’s fundamentals are still looking good (P/E=17.03 and DivYield=2,65%) while the company holds cash of about $100 billion. Apple’s capitalization reaches today 558 billion dollars.

Basic Numbers for the Apple Stock

Here are some basic numbers and ratios for the stock of Apple

Trading Center (2012)