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I'm a huge fan of stocks that go up.
I'm an even bigger fan of companies like Facebook Inc. (Nasdaq: FB) whose stock goes up, and keeps going up, for all the right reasons.
That is, until it drops like a stone.
A lot of investors admittedly missed FB on the way up. But a lot of investors who owned it rode it up and smartly got stopped out because they used trailing stops.
If you're either one of those investors or neither, you probably don't want to miss FB's next move up, but don't want to see the stock tumble more.
Volatility like we've been seeing can be scary. But with the method I'm about to share with you has been a staple in my Zenith Trading Circle research service.
Since the beginning of 2018, I've shown my Zenith readers opportunities to snag 11 double-digit, 12 triple-digit, and two quadruple-digit winners – the first in Money Map Press history, I might add. That's total winning gains of over 4,000%.
And if you haven't had the chance at gains like that this year… well, that's pretty sad, to say the least.
But if you're interested in learning how exactly we do what we do at Zenith, just click here for more information.
Now, here's how to play the world's most popular social media site in any market condition…
"KISS" with Facebook
There are so many ways to play the market and to play a stock that it can be dizzying, to say the least.
The good thing is that one way of playing always works. The "Keep It Simple Stupid" (or KISS) method of trading and investing works every time. And the beauty of it is that it really is simple.
Facebook's the perfect example.
It would be easy – but time-consuming – to get into all the reasons and metrics that drove FB's stock higher, analyze what each moving part did, and how the stock reacted.
But that's not simple.
What is simple, because we know it's true and because it's after the fact, is that FB made money figuring out how to attract advertisers and how to transition its success attracting advertisers onto mobile devices.
And, with over two billion users, FB has a huge audience coveted by advertisers.
That's not rocket science.
But FB going from $25 in 2012 to $218.62 this year is a rocket ride. That's a massive 774.48% gain.
Then the rocket began to tumble out of its orbit.
On July 26, 2018, FB's stock fell 19%, closing at $179.26 after the company missed expectations on Q2 revenue and showed slowing user growth. To make matters worse, management warned about future growth during FB's earnings call.
The company lost $120 billion in market capitalization that day, the worst one-day drop in the history of the stock market.
FB's market value the day before, on July 25, was $630 billion. At the close of trading on July 26, it was worth $510 billion. Ouch!
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And that wasn't the end of FB's slide.
The stock got to $150, where it had considerable support. It hung there once, twice, and then broke down. The stock bottomed out at $139.03. Over this past week, the stock popped back above $150.
Here's what all that action means to the pros, and how you should view the stock right here.
The FAANG Gang
First, in the larger context of "the market," which has been volatile to say the least, no one knows if the downdraft is over or not. Some benchmarks have fallen 10% from their highs – the classic definition of a "correction."
Analysts are split, but the weight of investor nervousness has a slight majority leaning towards more near-term selling.
But, we could just as easily go higher.
The problem investors face when looking at FB is if it will rise with the market if the worst is over and if it will head back to new highs. Or will FB, which has been the weakest of the former tech-darling FAANG gang, crumble if the market tumbles?
This is how I'd play FB right now:
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
He helped develop what has become known as the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of 10X Trader, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade.
Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps.
Shah is a frequent guest on CNBC, Forbes, and Marketwatch, and you can catch him every week on Fox Business's "Varney & Co."
He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.