Here’s how we are trading Meta ($META) – December 2, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to get right to it here, let’s talk about Meta ( NASDAQ: META ), more specifically, what we did on this.
I typically don’t like to open new positions on Fridays for the simple reason that, when you think about it, on the very day that you open a new position you want it to be profitable, that’s why you’re buying it, but you’re probably not going to be that profitable on it before the closing bell rings.
And now you’ve got two days to sit there and fret about your trade. Did I do the right thing? Was there any reason for me to be buying on Friday as opposed to just waiting until Monday? Maybe I should have waited, what happens if this? What happens if that? So there’s a lot of second-guessing that can go on over a two-day period if you opened up a new position on a Friday.
That’s a general framework that I have in my trading, though it’s not an inviolable rule, by any means. But it’s one of the things that I’ll think about on a Friday as I’m looking at the market, it’s an additional thing to check. It’s Friday, do I really want to buy this here? Is this really important for me to do this now? How am I going to feel about this tomorrow?
In this case, we did get into Facebook or Meta ( NASDAQ: META ), whatever you want to call it, as it was pushing through the 50-day moving average. Here’s where the price is now, it’s looking pretty smart. But it’s really not that, it’s just taking a trade and defining where your risk is.
My sense was that when I looked at this market I saw the way the stock market is trading. We look at the FANGS ( NYSEARCA: FNGU ), and they’re looking pretty good. NVIDIA ( NASDAQ: NVDA ) was the only one that was not looking good, though it was definitely showing some rebound stuff. Microsoft ( NASDAQ: MSFT ) is still in a trading range, though we did add that today as well, a little bit lower than it is right now.
Overall, the atmosphere was pretty good for coming into December. Also, it is not lost on me that we’ve had a heck of a year. We’re in a seasonally strong time of the year in December, and so I felt like the odds are in our favor, that we’re going to get a nice trade on the stock. Frankly, I just decided, no, I don’t want to wait until Monday, and this is why. If I’m buying the stock here at 576.90, right around there, what’s my risk on this? I’m looking at this and deciding, all right, where would I have to see the stock go for me to conclude that I’m wrong?
This last Friday, on the 22nd before Thanksgiving week, this last Friday was down here. But I don’t care about last week, what I care about is this week. Again, I’m talking as if it were Friday. What I’m really concerned about is Monday the 25th, and the low on that was 556.39. And so my sense was, I want to protect this trade in this way.
I’m buying it on a Friday, if it happens to slip back below this week’s low, then I’m obviously wrong on the trade, so I’m going to go ahead and take that exit. This is just a little bit over 3 percent risk. That is a small risk to take on a stock like Meta ( NASDAQ: META ), you know ultimately it’s going higher. A lot of people would say, Well, I just want to own this. There’s nothing wrong with that, and it’s going higher, this thing is as strong as death. I put this on here with a well-defined stop, which means I could hang out on Saturday and Sunday and not have a problem.
So what happens? Sure enough, the stock closed here on 574.32, and then it opened up here at 577.49. So if I had just waited and not bought it at all, the close was 574.32, and the open was 577.00 so I would have missed $3.00. It doesn’t seem like a lot, but you know what, that stuff adds up.
And so once the stock gaps up a little bit and then it trades above this high here, it trades above Friday’s intraday high, what do we see? Right out of the gate, this shoots above there and it doesn’t even look back. And so we’re taking the trade on a Friday with a defined risk, anticipating that we may get a gap on Monday that makes us want to be in on Friday.
And so guess what we’ve avoided by doing this? We’ve avoided having to make a decision on this. Oh, the stock is up for the first five minutes, it’s up here. Now, what do I buy, what do I think? Go back to the other time frame, blah, blah, blah. I didn’t have to do that, I’m already in the position.
Now I’m looking at this saying, all right, well let me just wait and see how this plays out. So that’s what we’re doing now. And now you can look at this here and say, Well, right around here, right around $600.00 is where current resistance is. And so as we look at this right now we’ve got another 1.3, 1.4 percent of upside remaining in this quick trade.
It doesn’t seem like a lot, it’s definitely a channel trade for only about 5 percent maximum. But it gives us a cost basis that we can live with. And then when we see the stock pushing up against this, we’re in a better position, we’re in a position of power. And we can also then look at the weekly chart and see what’s really going on here. A nice little prolonged, I wouldn’t call it a cup because it goes back a couple of months. But we’ve got a nice little prolonged consolidation here above 550.00. My bet is, this is what you’re going to see.
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