Meta Platforms, Inc (NASDAQ:FB) and Snap, Inc (NYSE:SNAP) gained 5.37% and 7.24%, respectively, on Wednesday in a bullish attempt to reverse course to the upside. The social media stocks have been beaten down since September 2021, when they reached all-time highs.
In the premarket on Thursday, Meta and Snap were trading slightly lower in sympathy with the SPDR S&P 500 (NYSE:SPY), which was reacting bearishly to Consumer Price Index data for January. Consumer prices rose by 7.5% compared to the analyst estimate of 7.3%, making it more likely the Federal Reserve will continue with its plan to raise interest rates in March to combat inflation.
On Thursday when the market opened, bulls began to buy the dip on both Facebook and Snap and neither stock negated the bullish signals on their charts. While both stocks look set for a run to the upside, Snap has bounced back up into a potentially bullish pattern and has confirmed a trend change. Facebook, in comparison has work to do in order to give bulls confidence going forward.
It should be noted that events affecting the general markets, negative or positive reactions to earnings prints and news headlines about a stock can quickly invalidate patterns and breakouts. As the saying goes, the trend is your friend until it isn’t, and any trader in a position should have a clear stop set in place and manage their risk versus reward.
In The News: "Shark Tank" investor and O'Shares ETFs chairman Kevin O'Leary said Wednesday on CNBC that Meta had hit an accumulation zone and that institutional investors would begin to rebuy shares at current levels. O’Leary also said he had purchased shares of FAANG stock yesterday.
At least one insider at Snap isn’t bullish on the stock. Chief Technology Officer Robert Murphy sold a total of 950,000 shares at an average price of $38.15. The insider received around $36.25 million from selling those shares.
See Also: Here's Why Tigress Financial Is Bullish On Facebook Parent Meta
The Meta Chart: Meta gapped down almost 25% lower after printing its fourth-quarter earnings on Feb. 2. The stock then fell an additional 9% between Feb. 4 and Feb. 8 before bouncing up from the $216 level.
- On Wednesday, Meta printed a bullish Marubozu candlestick on the daily chart, which indicated higher prices were likely to follow. On Thursday, the stock began with an inside bar, but by 10 a.m. Meta broke up from the pattern and surpassed Wednesday’s high-of-day price, which is bullish.
- Meta has not yet made a higher high or a higher low to indicate it will begin to trade in an uptrend. Traders who are not already in a position can watch for a retracement above the $217 level to enter into the stock.
- Facebook has resistance above at $244.61 and $255.61 and support below at $230.31 and $216.15.
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- On Thursday, Snap was attempting to break up bullishly from the falling channel. If the stock does so, it will regain support at the 50-day simple moving average, which would mean longer-term sentiment has turned bullish.
- Like Meta, Snap began the trading day with an inside bar but quickly broke up above Wednesday’s highest price, which in Snap’s case caused the eight-day exponential moving average (EMA) to cross above the 21-day.
- Snap has resistance above at $43.26 and $47.92 and support below at $39.96 and $37.35.
