The Best Indicator The Market Will Roll Over

Facebook plans to raise $10.6 billion in mega IPO

SAN FRANCISCO (Reuters) - Facebook Inc aims to raise about $10.6 billion in Silicon Valley's largest IPO, dwarfing the coming-out parties of tech companies like Google Inc and granting the world's largest social network a market value close to's.

The eight-year-old social network that began as Mark Zuckerberg's Harvard dorm room project indicated an initial public offering price range of between $28 and $35 a share on Thursday, yielding a valuation of $77 billion to $96 billion.

The social networking phenomenon stands to raise as much as $12 billion at the upper end of that range. But if an over-allotment or "greenshoe" option is triggered, the company could sweep up a maximum of $13.6 billion, according to a Thursday prospectus.

The indicative price range can be adjusted depending on Wall Street's response. Investors are expected to flock to the highly anticipated IPO, though some have voiced concerns about the social network's longer-term growth.

Last week, Facebook reported its first quarter-to-quarter revenue slide in at least two years, a sign that the social network's sizzling growth may be cooling just as it prepares to go public. Its stock should begin trading in about a week or two.

"People are going to be very comfortable with this valuation," said Sam Schwerin of Millennium Technology Value Partners, which owns Facebook shares worth roughly $200 million. The firm is not selling in the IPO.

"A price range of $28 to $35 will be a relief to some people who are concerned that they may try to take the highest possible price because of high demand.

My view:

Forget about MACD, Slow Stochastics, RSI, and Bollinger Bands or your favorite indicator for a moment.

How can we tell that the market will roll over very soon?

By having a gigantic Initial Public Offering for a social networking site!

Did Mark Zuckerberg invent a new form of energy that will bring electricity to the impoverished masses?

Did his company discover a way to grow twice as much food per acre to feed millions of the hungry?


So we are looking at an IPO with a potential value 5 times that of Google's?!

What's up with that?

Perhaps we should call this moment in time Peak Initial Public Offerings (PIPO).

In my view, Facebook's plan just confirmed we are entering a bear market.


  1. Pretty much, facebook is a confirmed social evil, and a joke valuation, just like 1999 again.

    1. I am afraid you are right Steveo.
      There is this bad feeling bubbling below the surface that we have the equivalent to the 2000 tech bubble blown again, but this time in both the S&P (and other major markets) AND in the sovereign bond market.
      I suspect this summer will be telling.
      Portugal has a huge amount of debt to rollover in June if memory serves me correctly.

  2. CBG Short Trade idea (purchased from Breakpoint Trades)


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