A stock that's done nothing since early February could be the key to the stock market's fate. That stock is Meta Platforms (META) . Way back on February 2nd, META gapped to new all-time highs post earnings and continued making new highs for two more months.
It then gapped lower in April (again after earnings), pivoted, rallied, and made another marginal new high again in July...
and then has pulled back once more. That's a long-winded way of saying that META has been trapped within a long trading range or, in technical parlance, a rectangle pattern. A rectangle formation, especially a big one like this, can end up being either a continuation pattern or a reversal pattern.
In fact, every kind of digestive phase eventually leads to the continuation or the reversal of the underlying trend. META's breakout and breakdown attempts over the last six months have failed to garner any follow through. As such, it isn't worth guessing until there's a definite move.
At some point one side will give way and META will experience an outsized move. It went through a very similar process from July – December'23 before breaking out. The direction of its next inevitable break very well could influence the S & P 500 from here.
META is by far the biggest component within the XLC Communication Services ETF with a weight of 22%. The two classes of Alphabet's stock, GOOGL and GOOG, together make up another 21%. But XLC has been much more aligned with META over the last few years.
In September 2021,.