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04/13/2021 |

$FB Daily Price Chart Case Study: Weekly Bollinger Bands® Overlay Looking at Analyst Estimates vs. Insider Trading

If one was to say that they believed in fortune-telling, it would seem crazy to most. However, events in the future can be predicted within a reasonable margin of error with the understanding that human behavior is a measurable mathematical concept at its core and results in predictable outcomes to some degree. Commonly observed conditions/patterns lead to expected outcomes and numerical measurements tip scales at predictable points.

When it comes to reading these statistical probability outcomes which exist in the financial markets, it is not done with a crystal ball, it is by technical analysis of price action on the charts. Technical indicators are the traders’ crystal ball into what insiders and institutions are doing and which direction price might be heading.

In this blog post, we will look at a case study using one such indicator (Bollinger Bands®) and how its relationship to price action may provide insight into the contractions found between current price trends and what insiders are really doing, looking at $FB (Facebook).

$FB Daily Chart

$FB chart.

This is a daily chart of Facebook over the last 10 months (since June 2020). As you can see, price has traded in a very tight range and is starting to potentially breakout of this narrow range into the middle of April 2021. In this example, we will go over some interesting discrepancies between analyst estimates/ratings vs. insider selling as well as looking at what happened the last time price was this far outside of the weekly Bollinger Band.

  1. This number represents the last time the daily price action closed above the weekly Bollinger Band. This unique view is possible by using the “MTFA” feature on TrendSpider which allows users to overlay a longer-term timeframe indicator on a shorter-term price chart. Last time the daily price was this far outside of the weekly Bollinger Band, there was a rather strong correction to the downside for multiple weeks after this. This same setup is currently forming into mid-April.
  2. This number represents the daily price respecting the weekly SMA (20) after the strong move down in late August/early September of 2020. The SMA (20) is part of the Bollinger Band and is what the upper and lower band are based off of (2 standard deviations above and below the 20-day SMA).
  3. This number shows a large amount of buy ratings by analysts which have continued to pile in over the last 10 months. Notice there is only one sell rating that occurred in early August before the price melted up through the weekly upper Bollinger Band in late August 2020.
  4. This number shows a very interesting discrepancy between what analysts are saying and what insiders are doing. Notice that Mark Zuckerberg has been selling 10’s of millions of dollars’ worth of Facebook stock almost daily for many months. If you scroll down, you will see March Zuckerberg has been selling shares like this (and has actually started to increase the size he is selling) since November of 2020.

What is MTFA?

Multi-Time Frame Analysis in TrendSpider.

TrendSpider’s Multi Timeframe Analysis tool allows you to overlay larger timeframe candlestick patterns on a lower time frame chart to see how the shorter-term price action interacts with longer-term technical levels. Simply turn on the “Patterns” feature, select the patterns you wish to highlight, turn on the MTFA button, and choose which time frames you would like to view. Read more on MTFA