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Facebook chart courtesy of StockCharts.Com, annotations by Mish

Word About Gaps 

• Gaps in a chart happen when a stock opens above the high of the previous day or below the low of the preceding day.
• Long time readers know that I expect gaps to fill sooner or later. 
• The huge Facebook gap down in October closed (stock rallied above the gap down price) in January. The gap down in September just closed.
• There are now four open gaps, all up. 

Facebook Good News 

• On February 1, Facebook-parent Meta announces $40 billion stock buyback. The 
• BBC reports Quarter of global population used site daily in December

It was that latest usage report that caused the gap up. 

Shares in parent company Meta surged more than 15% in after-hours trade as boss Mark Zuckerberg declared 2023 the "year of efficiency".

He said he was focused on cost cuts.

"We're in a different environment now," he said, pointing to the firm's revenue, which declined in 2022 for the first time in its history after years of double-digit growth.

"We don't anticipate that that's going to continue, but I also don't think it's going to go back to the way it was before."

Regarding buybacks, it seems to me that $40 billion would have been better spent before the share price more than doubled. 

Of course, a primary reason for buybacks is to counter dilution from execution options. There is no real incentives for buybacks at the right time. 

Hooray For Jobs

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Assuming you believe the data, the Unemployment Rate Hits New Low of 3.4 Percent

Meanwhile ...

Payrolls vs Employment Since May 2022

• Nonfarm Payrolls: +3,031,000
• Employment Level: +1,893,000
• Full Time Employment: -166,000

Please click on the link for a discussion of annual adjustments that sent jobs and employment soaring.

Bear Market Rallies

Between 2000 and 2002 the Nasdaq rallied 15%+ in 8 different occasions until the final bottom was reached

In some of these 8 occasions the rally was as big as 40% from the local lows

Long-lasting bear markets come with massive rallies

Don't confuse them with new bull markets

— Alf (@MacroAlf) January 24, 2023

Long-lasting bear markets come with massive rallies. Don't confuse them with new bull markets.

I expect all four of those Facebook gaps to close. 

The Fed and Lags

If you have been net long for this rally, congrats! But think about where things are headed as the Fed Commits to More Rate Hikes. 

Also, consider my January 30 post How Long is the Lag Between Fed Rate Hikes and Real World Activity?

I strongly suspect that any good news is now mostly behind us. 

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