Meta Platforms Triggers Our Buy On Weakness Signal (Technical Analysis)

Summary:

• Meta Platforms has improved from a Timing buy-on-weakness signal to a Confirmed buy-on-weakness signal.
• Portfolio managers are buying Meta at lower prices, indicating potential positive movement in the stock.
• If Meta underperforms the index, it will be removed from the Model Portfolio, but the Confirmed Buy Signal suggests a potential bounce.

Meta Platforms (NASDAQ:META) just improved from our Timing buy-on-weakness signal to our Confirmed buy-on-weakness signal. This tells us that portfolio managers are coming back into META to buy at these lower prices. Both of these signals are seen in the report below in the Tmg and Cfrm columns. You can see that the buy signal has moved from the Tmg column to the Cfrm column for META. The Tmg signal is now blank because the buy signal has improved to the Cfrm column. (Live Nation (LYV) shows the early, buy-on-weakness signal in the Tmg column, trying to trigger the Cfrm buy signal.)

META is already in our Model Portfolio, so we are very interested in this important improvement in the buy-on-weakness signal. If the portfolio managers do not come in to take META back up and it starts underperforming the Index, then we have to delete it from the Model Portfolio. This is our strict Sell Discipline.

We have META in our Model Portfolio because it had our SID Buy Signal and has dropped to a Hold Signal. You can see that in the SID column of the report below. The green Buy Signal has changed to a grey-shaded Hold signal. There is no problem with a Hold Signal as long as META keeps outperforming the Index on a trend basis.

Our Confirmed Buy Signal in the Cfrm column is the first indication for us that META will bounce to test its recent high. This signal confirms for us that the portfolio managers are coming back in to buy on weakness. In other words, the sellers are done and the buyers are back. Supply has switched to Demand.

You can see this taking place on the 20-day bar chart we are showing for META in the D:S Chart column on the report below. Notice how the red bars of Supply have improved to black bars of Demand. Also in the D:S column, you can see the D1 signal for early Demand. The maximum reading for Demand is D9 and we watch to see if Demand keeps increasing taking price higher.

To do our due diligence on these signals, we check to see what the SA analysts are saying. According to SA, they have a consensus Buy rating, while the Wall St. analysts have a Strong Buy. After reading the articles, we turn to the SA Quant rating which is also a Strong Buy. According to this rating, META has good scores for Momentum, Revisions, Profitability, and Growth, but a weak score for Valuation. Valuation explains why sellers come in to take it down. When they fail to trigger our Sell signal, we have confirmation that it is still a buy and we expect our SID grade to improve from Hold to a Buy signal.

Here is our Communications (XLC) daily report showing the improvement in our buy-on-weakness signal as it moves up from a Tmg column buy signal to a Cfrm column buy signal. We will watch Demand increase on the D:S column and the 20-day DS Chart. We would like to see Demand change the SID column signal from a Hold Signal to a green-shaded Buy Signal. Failure to do that would be a sign of weakness for META.

Here is our weekly Meta chart showing our proprietary SID signal at the top of the chart. You can see it has dropped from a Buy Signal to a Hold Signal, but the technical signals shown below the SID are improving, showing rising Demand.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in META over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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