Facebook Earnings Analysis and Projected Price Action

Actual: $.19 EPS & $1.8 Bil Rev

Estimated: $.14 EPS & $1.62 Bil Rev

Facebook announced earnings after the bell tonight and the street was highly impressed with shares jumping as much as 20% in extended hours trading.  The company's revenue popped a stellar 53% in the second quarter on strong advertising growth.  Mobile ad revenue had been a focal point leading into the quarter and with 41% growth in the space, there is reason for optimism.  According to Zuckerberg, "The work we've done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future." Facebook also has new products in the works that could serve as a catalyst for future growth including video for Instagram, Verified Pages, hashtags, and embedded posts.  As a result, signs are pointing upwards on the social network giant.

Now, how to trade it when the market opens tomorrow?  Shares will open significantly higher at the open, so taking a long position at that point will be a high risk trade. If you're a day trader, a good rule of thumb is to wait at least 5 minutes after the bell rings and the market makers clear their inventory before taking a position above the 5 minute bar high when going long or below the 5 minute bar low when going short. For long swing traders, watch prices in the morning. If prices sell off, a solid entry point would be the swing high at 29.  For short swing traders, a test of 32.50 could provide strong resistance and a quality entry for a pullback in prices.  See below for ichimoku cloud levels:

Swing high 2: 32.50

Swing high 1: 29

Cloud high:25.88

Cloud low: 24.40