Meta’s historic winning streak comes to an end. What the charts say happens next

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Meta’s historic winning streak comes to an end. What the charts say happens next

Meta’s impressive 20-day winning streak rightfully drew a lot of attention — until it abruptly ended Tuesday. Ranking among the longest in history for any stock, its streak was bound to end at some point. Now that it has, the key question is: what happens next? First, let’s acknowledge the obvious—there are no clear near-term support levels right now. This could be frustrating for investors who have been waiting for a dip. Typically, when buying weakness, we have at least one reference point to lean on, but META is currently in “support discovery” mode. We typically use that term when describing stocks in a freefall: traditional support levels don’t matter (moving averages, trendlines, former highs, etc.). While META has earned the right to see profit-taking, there’s no clear indication of where the next bid will emerge. Despite this uncertainty, there’s some good news: we don’t need to know where demand will return. When a stock (or the market) finds a floor, that point becomes the new support. From a technical perspective, that first new low will be the starting point for the next potential pattern to form. For illustration purposes, here’s an example of how META’s next consolidation phase could unfold. If it mirrors past setups, it may help position the stock for another leg higher. But how likely is that, considering how extended META had become? The 20-day winning streak was historic, but what’s not being discussed is that META’s 20% gain over those 20 days isn’t unprecedented. While impressive, it’s not the biggest such move. Coming off the 2023 lows, META surged nearly 50% in just 20 days. While these extreme rallies are rare, they’ve happened enough to reveal a pattern. Looking at META’s historical performance after 20-day, 20% surges, all but one (red line) occurred within uptrends. In most cases, the stock continued higher over the following months or even years. Of course, there’s no guarantee that history will repeat. However, if demand returns during this pullback, META will have the chance to consolidate, digest its gains, and potentially build a foundation for its next move higher. META vs. S & P 500 META has been a leading stock since bottoming in late 2022, flipping from a severe underperformer against the S & P 500 to a consistent outperformer over the past two years. The concern now is whether META has run too far relative to the market, with its latest surge amplifying this move. However, as this relative chart highlights, the META/SPX ratio has now returned to the long-term uptrend it crashed below in 2022. In other words, META is likely due for a pause after its recent 20% gain in 20 days, but once it digests this move, it wouldn’t be surprising to see it resume its outperformance and sustain the uptrend once again. — Frank Cappelleri Founder: DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.

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