Meta stock is falling on earnings, but is still holding key support at $155. Here the trade.
It’s been a busy couple of days filled with mixed signals and, to be quite frank, several positives.
First, the stock market rallied on Wednesday morning as did Microsoft (MSFT) – Get Microsoft Corporation Report, Alphabet (GOOGL) – Get Alphabet Inc. Report (GOOG) – Get Alphabet Inc. Report and Shopify (SHOP) – Get Shopify Inc. Class A Subordinate Report, even though all three companies missed on earnings and revenue expectations.
That rally came ahead of the Fed’s decision to raise interest rates by 0.75 percentage point — and accelerated after the Fed’s announcement.
To see stocks rallying on bad news is quite bullish. If this had been April or May, these reports and the Fed’s rate hike would have buried the S&P.
Meta investors are likely not surprised by its miss on sales and profit. That’s as Big Tech has been missing the mark and after Snap’s (SNAP) – Get Snap Inc. Class A Report dreadful post-earnings reaction last week.
Unlike Microsoft, Alphabet and Shopify, however, Meta stock is not rallying on the day. The Facebook parent’s shares are currently down about 5% and were down as much as 8.7% earlier in the session.
Trading Meta Stock
Weekly chart of Meta stock.
Chart courtesy of TrendSpider.com
Here’s the thing, though: Meta stock rallied more than 6.5% on Wednesday ahead of the earnings report. With today’s decline, we are still above Tuesday’s close and almost back to Wednesday’s open. More or less, we’re just seeing some volatile, choppy trading near the low end of the range.
Meta stock is holding key support in the $155 area. If this stock can rally despite the earnings miss, the bulls may have something significant to work with.
On the weekly chart I see the significance of $155, which was thrust into the spotlight once the stock’s wedge pattern broke to the downside.
If $155 ultimately fails as support, we quite likely could see a flush down to the March 2020 lows near $137.
On the upside, the 10-week moving average clearly has been active resistance. This measure has been pressuring the shares lower since January and was a significant trend killer in the second quarter.
If the stock can clear this measure and rotate up through $175, the stock may be able to form a more constructive uptrend.
That could eventually put $200 in play, although right now there is significant overhead resistance in the $225 to $235 area.
But by the time Meta stock gets there — assuming it does — the measures in this zone will have likely moved by then.
There are some potential positives to Meta stock. But it all starts with the shares holding $155.