Picking Prices to Buy Microsoft and Meta After Rough Pullbacks

Thursday was a rough day for two prominent mega-cap stocks. Meta Platforms (META) , parent company of Facebook, Instagram, and WhatsApp, suffered an 11.3% loss. Shares of Redmond, Washington-based software giant Microsoft (MSFT)  declined by about 3%.

I’ve been getting questions from investors who are concerned about these two names. Should I hold on to these stocks, and if so, at what price would that change? If I want to buy Microsoft or Meta Platforms, what price should I pay?

These concerns are understandable, if only for the fact that these two companies are part of a group of stocks that had seemed almost invincible — stocks with a market capitalization of $1 trillion or more.

We’re in the thick of earnings season, so it's no surprise that both declines coincided with quarterly reports. Let’s go to the charts to see how investors should handle these two stocks.

Meta Platforms Loses 200-Day MA

Meta Platforms has fallen beneath its 200-day moving average (red) for the first time since May 1. The stock declined from a head-and-shoulders pattern (shaded yellow) that had been forming over the past four months.

Based on that pattern, Meta could find major support in the $600 area. This is due to both the measurement of the formation and the location of the stock’s rising trend line.

If the stock falls to $600, I’d be a buyer in that area. As long as Meta remains above that figure, investors should hold on to the stock.

Microsoft Stumbles on OpenAI Investment

Microsoft bested analysts’ projections for earnings and revenue. However, the company announced a $3.1 billion loss on an investment in OpenAI, producer of the popular ChatGPT AI-based computer programs.

Shareholders should see that loss as nothing more than the cost of doing business. Despite Thursday’s setback, Microsoft shares are still up by nearly 25% year-to-date.

From a technical perspective, my only concern about Microsoft is a shooting star formation that appears to be forming on the stock’s weekly chart (arrow). That bearish candlestick pattern suggests a deeper pullback, perhaps to the $500 area. 

I’d be a buyer of Microsoft near $500, and would hold it as long as it remains within its weekly bullish channel (parallel lines). The stock’s bullish trend line currently comes in just below $400, but that line is rising every day. If I were a long-term holder of Microsoft, I’d keep it as long as the stock maintains its position above the trend line. 

At the time of publication, Ponsi had no positions in any securities mentioned.