Is Meta ($META) still in Phase 1? Here’s my take – June 7, 2024
I’m Dan Fitzpatrick at StockMarketMentor.com. I want to look at Meta ( NASDAQ: META ) here.
This is why, you can see how the stock really tightened up here. This is a Bollinger Band squeeze, it’s due to a sideways move in the stock. Once a stock has been drifting sideways, with closes that are very close to each other, that pulls Bollinger Bands very tight. Because the Bollinger Bands are just 2 standard deviations above and below the 20-day moving average.
If the 20-day moving average is flat, that’s what you are going to get, Bollinger Bands that are really tight together. When this happens, ultimately you are going to see this kind of move. You are going to see this kind of move, where the bands really, really tighten and then they expand.
Why do they expand? It’s because the stock has been drifting sideways for a certain amount of time. And low volatility leads to high volatility, and then back to low volatility when traders get tired. It’s like start and stop and start and stop, that’s what we’re starting to see now with Meta ( NASDAQ: META ).
Frankly, this is what I’m planning. I see the stock drifting sideways for a couple of days. I’ve got a lot of lines drawn on here, these are swing trades that we’ve done. We got in it now on a new position, higher than it is right now on this breakout on Wednesday, 494.76, and then the stock is drifting sideways now. I’m looking for more upside here. The stock is not overbought.
By the way, somebody had mentioned to me about NVIDIA ( NASDAQ: NVDA ) and talking about how the RSI was so overbought that the stock was going to crash and take everybody with it. I’ll just mention, as a general technical law or rule, I guess, the best thing that a stock can do is get overbought and then stay that way.
And that is definitely the case with these high-fliers, certainly whether it’s NVIDIA ( NASDAQ: NVDA ), Meta ( NASDAQ: META ), when it was back here in the day, so to speak. Just be mindful of that. When you see a stock and it’s showing overbought readings on technical indicators, that’s not a bad thing.
Now it doesn’t say, buy, buy, buy either. You still have to look for proper entry points, and there’s a whole technique to that, hopefully, you know what it is. It doesn’t mean that you just need to buy the stock, Oh, it’s overbought, I’m in. It’s a stock that you say, All right, this is obviously a strong stock. I do want to own this stock. Now, when can I have an opportunity to buy it?
That’s the way I’m looking at it. With Meta ( NASDAQ: META ) I would say, your opportunity to buy this stock would be on a move above today’s intraday high, right now it’s 498.91, so let’s just say 500.00. If or when the stock breaks out above 500.00, that would be a good time to buy.
I will set my alert at a nickel over $500.00; 500.00 is more meaningful to me than this candlestick, where the high is 502.82. I’d certainly be looking at it if the stock ran above 500.00. Then I would want to see whether the stock did actually surpass this level as well. But I really care more about the even numbers.
That would be one opportunity to buy Meta ( NASDAQ: META ) if you’re looking to buy Meta ( NASDAQ: META ). The other would be if the stock pulled back. If this breakout looked like maybe it’s not a squeeze, it’s going to resolve to the upside. Instead, the stock pulls back, tests the 50-day moving average, and then you buy, right? No, you don’t buy then.
You buy when the stock shows you that it actually is going to spring higher. Because it could always keep coming down, but when it comes down to the 50-day moving average, that’s when you look for evidence that there’s somebody else buying the stock. You don’t want to be the first one out of the foxhole. That guy always gets drilled in the chest, you want to wait a bit.
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