Recent trading in Meta Platforms (FB) highlights how SIA Charts rankings not only help advisors to identify opportunities with high relative strength, it also helps advisors to screen out stocks with weakening relative strength or at risk of significant underperformance. In the case of Meta, advisors had two relative strength warnings signals last fall, one when FB fell out of the green zone in the SIA S&P 500 Index Report, and one when FB entered the Red Unfavored Zone.
Yesterday, FB shares plunged 26.4% and fell 117 positions in the rankings to 500th place.
There had also been several warnings in the candlestick chart over the last several months that Meta Platforms (FB) shares were coming under distribution before its big plunge. An uptrend line that dated to the March 2020 market bottom was snapped back in September and resistance had come down to the $350 level. Most recently, a rebound attempt was faltering short of the 50-day average.
A measured move suggests initial support may appear near $230 followed by the $200 round number. Initial resistance appears near $250, a former support level, round number and the bottom of yesterday’s breakaway gap downward.
Long before plunging off a cliff yesterday, investors had lots of warning that Meta Platforms (FB) shares were struggling. The shares had actually peaked back in September and had been in decline since then. Over the last several months, the shares had completed three bearish Double Bottom patterns all of which were still active in the days leading into the big nosedive.
For the question of how low could FB go? Next potential support appears near $218.40 where vertical and horizontal counts converge followed by the $200.00 round number. Initial rebound resistance appears near $261.00 based on a 3-box reversal.
With a bearish SMAX score of 1, FB is exhibiting weakness against the asset classes.
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