The last time we provided a warning update on Facebook (NASDAQ:FB) was on August 1, when it was trading at $124. Since then price added about 8% in about 3 months to reach its recent $134 high; exactly as predicted! Then on last week's earnings it fell out of bed and is now trading at $120... Hence, more than 3 months worth of added-value whipped out in 1 day. That's why we warned about FB back then, and that's why we didn't recommend it back then as a buy either. Objective price chart analyses using patterns, Elliot wave, technical indicators etc trumps everything. Always.
Since that's all water under the bridge, what's next? Facebook bulls have once chance left: FB didn't peak for a massive first wave (black "5?"), which would bring a massive 2nd wave down to low $60s; but instead only peaked for a first wave of a larger 5th wave (red "i?"). This larger 5th wave, as the one shown, will then consist of 5 smaller red-waves (i,ii,iii,iv,v) and could target as high as $210ish. All the FB bulls need to do is defend the black 4 low made in August 2015 and ensure new price highs.
Do we therefore recommend FB as a buy? No we still don't. Our first warning was proven correct and price has now a lot of work to do before we jump back on board. For now all the technical indicators are pointing down, wanting to see lower prices. Once we see price turn back up, we will then determine if it was only a corrective bounce (to be followed by lower lows) or the start of a new uptrend (5 smaller internal waves). In the latter case we'll then buy the subsequent retrace. Until then, FB is on serious watch.