This technology stock could be crucial for the market’s future, and surprisingly, it’s not Nvidia.
Editor Thenews24.net
2 min read
Since early February, Meta Platforms (META) has been relatively stagnant, but its performance could significantly impact the stock market. On February 2nd, META surged to new all-time highs following its earnings report and continued to climb for two months. However, in April, it dropped again after another earnings report, then rallied to a new high in July before pulling back once more. Essentially, META has been stuck in a prolonged trading range, known in technical terms as a rectangle pattern. This pattern can either signal a continuation or a reversal of the current trend. Over the past six months, META’s attempts to break out or down have not been sustained, making it difficult to predict its next move. Eventually, one side will prevail, leading to a significant price movement. A similar situation occurred from July to December 2023 before META broke out. The direction of META’s next breakout could influence the S&P 500. META is the largest component of the XLC Communication Services ETF, with a 22% weighting, while Alphabet’s two stock classes, GOOGL and GOOG, together account for another 21%. The XLC has closely mirrored META’s performance in recent years. For instance, when META peaked in September 2021, the XLC followed suit, and when META bottomed in early 2023, the XLC did the same. This correlation extends to the S&P 500 as well. Although the XLK Technology ETF has a larger overall weighting in the S&P 500, the index has not deviated much from the XLC or META in 2024. Despite significant declines in many technology stocks, other sectors like Real Estate, Utilities, Consumer Staples, and Healthcare have helped the S&P 500 remain relatively stable. META is currently 7% below its highs but has not breached any major support levels or triggered a bearish pattern. If META can maintain its current position, it could help the S&P 500 stay afloat. Moreover, META has shown relative strength compared to the XLC and other major tech stocks since the S&P 500 last reached a new all-time closing high on July 16, 2024. If the market resumes its upward trend, META could be one of the first stocks to reach new highs again. -Frank Cappelleri Founder: https://cappthesis.com DISCLOSURES: (Owns GOOGL) All opinions expressed by CNBC Pro contributors are their own and do not reflect the views of CNBC, NBC UNIVERSAL, their parent company, or affiliates. These opinions may have been previously shared on various media platforms. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE 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. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.