Wednesday, December 12, 2012

Facebook's Nasdaq 100 Inclusion To Reduce Volatility

In a matter of a few months, Facebook (FB) has gone from a bumbling internet behemoth to a tech darling. Now prior to market open on Wednesday, the tech giant will be added to the NASDAQ-100 Index according to the news release by NASDAQ OMX Group (NDAQ). An event easily predicted, but another example that has added to the momentum for the stock.

The stock has jumped 50% since mid-November when it traded around $19. At the current price of nearly $28, the company trades at extreme valuations that could finally help the short thesis.

As a firm hoping to short Facebook stock (see articles here), the NASDAQ-100 event could be a signal of a top. Plenty of funds will be forced to buy the stock, hopefully pushing it to near-term highs.

An important question is whether being adding to the index signaled past tops? Similar to how the stock lockup that created potential added sales actually produced the November bottom and the ensuing rally.

Read the full article at Seeking Alpha.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 



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