When the market knocks you around you can regain your balance by sticking with time-tested rules. Meta stock provides a good example.
February 2023 was tough, no two ways about it. Both the S&P 500 and the Nasdaq made strong moves to the upside in the first two days only to reverse on the third. Choppy, sideways action ensued before they both ultimately closed near their lows for the month. On a monthly basis, the S&P and Nasdaq were down 2.6% and 1.1% respectively. But off their highs, they were down 5.3% and 6.6%. It was an uncomfortable month.
META Stock Offers Calm In The Storm
By Feb. 28, we had reduced our SwingTrader exposure to around 27% with Lamb Weston, VanEck Semiconductor and Dynatrace — two low-volatility trades and one software stock that was breaking its downtrend. Bruised from February's earlier volatility, we were looking to steady ourselves and regain some of that lost ground.
We found that opportunity with Meta Platforms. Following the social media company's earnings report at the beginning of the month, META stock gapped up over 20% on earnings. But rather than chase an extended stock, we waited for a higher-probability entry. Indeed, META stock did gradually drift lower. On Feb. 28, META opened above a descending trendline. With solid volume driving it and the Nasdaq moving up as well, we added a full position in META to SwingTrader (1).
The market waned for the next few days, but by March 3 both the S&P 500 and Nasdaq made strong moves off of support and we took our first profit (2). Ideally we want to book more than a 3% initial gain. But with the recent volatility we were eager to lock it in quickly.
The following Monday we took our next profit at 7% (3). Though we made it through the weekend, the rest of week was not as kind. By March 9, murmurs of the banking crisis were bubbling up and the indexes were undercutting their 200-day lines. We took our final profit in META stock, exiting the trade with a 5% average gain (4).
You Cannot Disagree With The Market
The key to success in any market, especially this volatile environment, is being flexible and following your rules. Learning to read the signs and moving with, not against, the general market is key. As news came out about the various banks collapsing, investors moved away from the financials and into technology.
Taking a step back to look with fresh eyes, the area we had been trading META stock was a nice, tight zone. The winds had shifted once more, and we opened a new position on March 14 (5). We are currently 10% above our entry. Be the reed that bends, not the oak that breaks.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available.
