Chart of the Day: Meta’s Technicals Continue to Erode
Headwinds continue for this mega-cap name but some support is not far away.
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We would have to place Meta Platforms (META) in last place when grading the Magnificent Seven names, and that is not a title of which to be envious.
The stock has had a miserable month of June, pushing lower by nearly 10% this month alone, knifing through prior support levels on higher volume selling. This completely smacks of institutional selling, the sort of distribution that has big money managers just getting rid of the stock from their portfolios. It has been happening for weeks.
Now, while some would argue META’s valuation seems compelling, trading at a 20x price/earnings ratio and 17x forward earnings, clearly the chart shows this doesn’t seem to matter. Margins are strong, revenue growth is there and new initiatives seem to be working.
Remember, the action of the market dictates what we are likely to see from a company down the road. Hence, if big money is selling the stock, there is a reason, and it’s possible the stock is still too expensive to own.
The chart and technicals are poor, with a downtrend channel well defined, lower highs and lower lows. Money flow (bottom) is also in a downtrend and is negative, while the relative strength (pane 3) remains weak.
Nothing in the chart says to buy here yet, but there is some good support coming lower, maybe around the $520 level, so that might be an ideal place to add more shares.
We like Meta Platforms in TheStreet Pro Portfolio and rate it a One, or “buy at anytime.”
At the time of publication, TheStreet Pro Portfolio was long META.
