SNAP Inventory: A Purchase or Promote? | Do not Ignore This Chart!

SNAP’s received a brand new recreation plan up its sleeve and, relying on how nicely it matches, it could make or break the inventory.

After flat or disappointing earnings stories for many of 2022, primarily as a result of weak social media advert revenues, SNAP inventory has suffered. The inventory’s worth has been within the single-digits territory for the latter half of 2022. However there was some motion to the upside in SNAP’s worth which may have been due to extra optimistic firm fundamentals, or it could possibly be using the wave created by Meta Platforms (META).

SNAP has taken a leap by investing in augmented actuality (AR) expertise, which could possibly be an asset for corporations that publicize on the SNAP platform. Think about nearly making an attempt on a pair of denims before you purchase them. Or ensuring an L-shaped desk matches completely in your house workplace earlier than committing to a heavy merchandise buy. This funding could possibly be the information that reignites investor optimism within the inventory, which appears to be beginning to take maintain (see chart beneath). However will it stick this time?

CHART 1: DAILY CHART OF SNAP. The value has moved above the higher Bollinger Band (see thumbnail view on the correct facet of worth chart), which is an indication of energy. The query is that if the energy can proceed. Click on on the chart to see a dwell model.Chart supply: StockCharts.com. For illustrative functions solely.

Snap, Crackle, and Pop

Within the above chart of SNAP, you see a couple of issues the inventory worth has getting in its favor.

• Worth has exceeded the higher Bollinger Band^®, which is usually a optimistic signal. For many of 2023, worth has moved alongside the higher band, however now that it has exceeded it, will worth proceed strolling the band, or will it pull again, prefer it did the final time this occurred?
• SNAP’s StockCharts Technical Rank (SCTR) was up by 39.8 factors on February 6. That is an enormous one-day leap, particularly after being near zero for virtually all of 2022; whether or not it could maintain on or transfer larger up its rank stays to be seen.
• The relative energy index (RSI) is climbing up in direction of the 70 degree. This occurred extra just lately on January 31, proper earlier than the corporate introduced earnings. However, after a disappointing earnings report, the worth gapped down. Will a follow-through in an upward worth transfer happen this time and, if it does, will the RSI stay above 70 for some time? That is one thing to control.
• SNAP’s inventory worth is barely above its earlier November 2022 excessive. For those who return so far as June 2022, this degree was a short-lived help degree.

Or, It Might Fizzle

The short-term nature of SNAP’s worth swings is one thing to remember if you happen to’re contemplating shopping for the inventory. Since June 2022, each time the inventory tried to maneuver larger, it lacked the momentum to push the worth larger. Since then, the inventory has been transferring sideways.

One other level to remember is that the 200-day transferring common (MA) is sloping downward (blue line), which implies the general long-term development remains to be down. If the inventory worth strikes above the $12 degree, the 200-day MA may act as a resistance degree.

If you’re contemplating shopping for SNAP, set an alert for when its worth crosses above the 200-day MA. A transfer past that degree supported by elevated quantity, excessive SCTR, and an RSI that is above 70 may set the fill up for the beginning of an uptrend. The important thing could be for the 200-day MA to show and slope up. Then you need to use your individual judgment and determine if the inventory matches your portfolio and for a way lengthy.

Jayanthi Gopalakrishnan

Director, Website Content material

StockCharts.com

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.