Meta stock is ripping higher today. Was this week the bottom? Let’s look at the chart.
It has not been a fun ride for Meta (MVRS) – Get Meta Report lately, with shares getting decimated after reporting earnings.
Meta reported after the close on Feb. 2. From that day’s high to the recent low, shares were down 34%.
However, it began a discussion among investors about just how low this stock really would go.
Meta stock was down 43.7% from its all-time high earlier this week and its valuation was down to just under 16 times earnings.
With a forward price-to-earnings ratio of ~17, this not only made Meta stock cheaper the S&P 500, it is well below the price many are willing to pay for stocks with much less growth.
Of course, it doesn’t help that Snap (SNAP) – Get Snap, Inc. Class A Report surged higher on its results and even Pinterest (PINS) – Get Pinterest, Inc. Class A Report — the poorest performer in the social media group — was able to rally on earnings.
Now though, we have to wonder if we just saw the low in Meta stock.
Trading Meta Stock
Daily chart of Meta stock.
Chart courtesy of TrendSpider.com
Meta stock fell hard over four straight sessions, but ended the decline with a doji candle on Tuesday.
While I can’t zoom back far enough while making the chart look legible, the $219.80 area was a major breakout zone in the past. It was resistance in 2018 and early 2020, but a mid-2020 breakout.
This level ended up holding as support, as Meta stock now works on reclaiming the monthly VWAP measure and the 50-month moving average.
Also in the vicinity is the 261.8% downside extension level from the recent range, as well as the 200-week moving average. In other words, a critical zone, in my opinion.
If Meta can’t find its footing here and ends up taking the low, it will lose a number of key support zones.
From here, I want to see if Meta stock can stay above the 50-month and monthly VWAP measures. If so, focus on the $236.50 to $237 area, where the stock finds its 61.8% retracement of the post-earnings range.
Above that opens the door to the 2021 low near $244.50, followed by the post-earnings high of $248.
If it can clear $248, it will go up into the gap and can work on filling it up to the $317 area. How far it fills — should it even get beyond $248 in the short term — remains to be seen.
Keep in mind though, this stock has been struggling even before earnings, as Facebook stock is working on its fourth straight weekly decline. However let’s see if we can call a bottom here.
