META Facebook/Meta - Too Much Bear, Not Enough Bull
Updated
Personally, I have only low opinions of Facebook, for it exists really as a big data collection hub. A lot of tracking cookies just traffic your browsing history and information back to their servers, whether you have an account or not, for AI analysis and surveillance.
And then there's the Metaverse, which Mark Zuckerberg and Communist Party Global are so delirious that they think you're going to spend your 40 hour work week with a 10 pound Oculus Rift bolted to your face while you lay on the floor in your pod covered in blankets with your heat restricted by the Communist Party Central Planning Committee to 18C eating the bugs as they scream "climate crisis" and "energy crisis" while showing off in their private jets, feasting on cows.
All commentary on the state of affairs of the company and the disastrous direction the Metaverse vaporware has taken it aside, I'm a price action trader, and when it comes to Meta, which is a keystone of the Nasdaq, you just have to have your interest piqued when something has dropped as much as this boat anchor has.
Notably, in the last 2 months and 4 days alone, Meta has lost 76% of its value.
Just look at this monthly:
With stocks, these types of doom gaps rarely seem to present a real buying opportunity to capture a retrace with. This is demonstrated in Meta on the weekly, which shows literally 8 consecutive losing weeks, with pretty much no bounce at all.
In the last two weeks alone, from the broken low to the bottom was another 28%.
Looking at the daily, we can see that the post-earnings dump just literally went straight down in a straight line.
This is the definition of "oversold," really. But as any seasoned trader who has burned their hands will tell you, something being oversold does not make it a buy, for that oversold indicator can snake on the floor for a lot longer than you can stay solvent before finally recovering.
Yet, we get to a key juncture that gives us a situation that certainly piqued my interest tremendously.
Not only has Meta dumped another $10 in the first trading days of November already, but it made a very weak high on the first and has since traded below a key pivot low from 2016.
Additionally, price action on Non-farm payrolls Friday showed Meta crush through a short term double bottom and then reverse.
To me, all the stars have aligned and all the conditions precedent for bears to get #rekt are present.
Going long here means you have a $7 upside just to the November high. That November 1 high will not be the high of the month for Meta. You can pretty much set your watch to that. At some point, they will rip it past it and clear out the shortsellers and bring in rally chasers, for sure.
Better yet, trading back to the post-earnings gap down to rebalance the range produces a $12 upside.
If Meta trades back to range equilibrium of the up candle before the earnings dump, your upside is $25.
A key point here is the area above $120 is a high resistance range on the weekly. If Meta starts to trade in here, especially if it doesn't reject hard, the upside can be significantly higher.
You might think that there's no way it could happen, but there's always some latent "news" driver that has been arranged to power the bear guillotine and bring the FOMO in.
The key point with trades like this is to manage your risk. Don't be too greedy. Take profits. Be patient. Give up if it won't pump.
But don't bottom short and make yourself a dead bear, either. If Nasdaq does what the Dow just did during election week next week, a lot of people's bottom puts are going to expire worthless while those short on margin are going to get gap up on open liquidated.
And then there's the Metaverse, which Mark Zuckerberg and Communist Party Global are so delirious that they think you're going to spend your 40 hour work week with a 10 pound Oculus Rift bolted to your face while you lay on the floor in your pod covered in blankets with your heat restricted by the Communist Party Central Planning Committee to 18C eating the bugs as they scream "climate crisis" and "energy crisis" while showing off in their private jets, feasting on cows.
All commentary on the state of affairs of the company and the disastrous direction the Metaverse vaporware has taken it aside, I'm a price action trader, and when it comes to Meta, which is a keystone of the Nasdaq, you just have to have your interest piqued when something has dropped as much as this boat anchor has.
Notably, in the last 2 months and 4 days alone, Meta has lost 76% of its value.
Just look at this monthly:
With stocks, these types of doom gaps rarely seem to present a real buying opportunity to capture a retrace with. This is demonstrated in Meta on the weekly, which shows literally 8 consecutive losing weeks, with pretty much no bounce at all.
In the last two weeks alone, from the broken low to the bottom was another 28%.
Looking at the daily, we can see that the post-earnings dump just literally went straight down in a straight line.
This is the definition of "oversold," really. But as any seasoned trader who has burned their hands will tell you, something being oversold does not make it a buy, for that oversold indicator can snake on the floor for a lot longer than you can stay solvent before finally recovering.
Yet, we get to a key juncture that gives us a situation that certainly piqued my interest tremendously.
Not only has Meta dumped another $10 in the first trading days of November already, but it made a very weak high on the first and has since traded below a key pivot low from 2016.
Additionally, price action on Non-farm payrolls Friday showed Meta crush through a short term double bottom and then reverse.
To me, all the stars have aligned and all the conditions precedent for bears to get #rekt are present.
Going long here means you have a $7 upside just to the November high. That November 1 high will not be the high of the month for Meta. You can pretty much set your watch to that. At some point, they will rip it past it and clear out the shortsellers and bring in rally chasers, for sure.
Better yet, trading back to the post-earnings gap down to rebalance the range produces a $12 upside.
If Meta trades back to range equilibrium of the up candle before the earnings dump, your upside is $25.
A key point here is the area above $120 is a high resistance range on the weekly. If Meta starts to trade in here, especially if it doesn't reject hard, the upside can be significantly higher.
You might think that there's no way it could happen, but there's always some latent "news" driver that has been arranged to power the bear guillotine and bring the FOMO in.
The key point with trades like this is to manage your risk. Don't be too greedy. Take profits. Be patient. Give up if it won't pump.
But don't bottom short and make yourself a dead bear, either. If Nasdaq does what the Dow just did during election week next week, a lot of people's bottom puts are going to expire worthless while those short on margin are going to get gap up on open liquidated.
Note
A breaking WSJ report says that META is preparing massive layoffs this week:wsj.com/articles/meta-is-preparing-to-notify-employees-of-large-scale-layoffs-this-week-11667767794
Could definitely lead to a pump.
Note
Did lead to a pump, I suppose. Definitely on its way to take out the $97.50 October high. "Pay the trader"
Note
Meta has certainly achieved all the objectives wished forDepending on what the MMs are up to, once something goes into the gap so early it may begin to retrace and take out lows.
It's only pumping on confirmation of the Monday news that it would layoff 11,000 people. And it's Wednesday morning.
Note
So, with Meta hitting all its targets, and in only three trading days, it's anyone's guess what it could do to the upside.We only know that the gap fills all the way to $130 and resistance is thick around $122.50.
We know there are gaps at levels below and a relatively flat bottom at $87.50.
So how to trade it? Something I've learned is that you have to let the MMs draw the trading range. If it runs away up, it runs away up. The opportunities for risk and reward that aren't just gambling emerge once the market structure is drawn.
If Meta trades like it doesn't want to fill the entire gap below to $97.50, then I would gander the intention is to trade to the upside equilibrium at $112 and then come back below.
The less it wants to come down the more it will go higher. You can buy dips until it gives you reasons to the contrary.
Note
Meta has gone up for 8 straight days and is showing a lack of velocity over range equilibriumWhat I don't like is the forward rounding pattern.
I personally feel this current rally is something of a bull trap with an incoming dumpster fire dump that is definitely a bear trap.
I think Meta is going back to $160+ afterwards, though.
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