3 min read

Special: Are PayPal and Facebook about to "Fill the Gap"?

Special: Are PayPal and Facebook about to "Fill the Gap"?

[NOTE: ORIGINALLY POSTED FEB. 21 FOR PAID SUBSCRIBERS] I briefly wanted to point out something very interesting and potentially very profitable for us...

Two of the biggest stocks of the past few years, Paypal (PYPL) and Facebook-Meta (FB) have fallen in unrelenting fashion in recent weeks, since reporting disappointing quarterly results.

But if my technical analysis of both companies' charts is correct, we stand a chance of "buying the bottom" for their stocks.

Skip to the bottom if you want the punchline on this potential stock buy. Otherwise just try to follow my reasoning on this...

Fall from Grace

Both fell by double-digit percentage amounts early this month when they announced disappointing news to investors.

Even more interesting, both stocks have continued to fall like rocks in the ocean:

  • Paypal is down about 42% in the past 3 weeks.
  • Facebook is down 38% in a similar length of time.

I think both stocks presented compelling values after their initial declines. But why have their kept dropping (considering the size of their cheering sections over the past 2 years)?

But if you read my work or watch my videos, what's the "old traders saying" I'm always going on and on about?

"Gaps are made to be filled."

Price gaps on a stock chart are created when the shares suddenly leap higher between the end of one trading session and the start of the next. If the stock continues to accelerate even higher from there, it leaves a gap, a sort of "air pocket" on its chart.

As it turns out, both Paypal and Facebook have 2 major price gaps (marked in red on the charts below) left behind from 2020.

The first was in April that year, and the second in May as investors identified both stocks as major winners in the "stay at home" pandemic economy:

Still with me so far?

If we fast-forward to 2022, both companies are now on the outs with investors. And when the stocks cratered early this month, what level did they initially fall to?

Right into the gaps created in May 2020:

And as you can tell from charts above, what price gap has been left "unfilled" so far?

It's the one from April 2020.

The Play on Both Stocks

We'll need to patient to see if this plays out, but I think both stocks are aiming to fall that last "gap" on their charts.

If I'm right, it will likely happen in the next few sessions.

  • For Facebook, that gap exists between roughly $195 and $200.
  • For PayPal, the gap is between $97 and $93.

When they do so, my hunch is that both stocks will likely have bottomed and be ready to move higher. I think it portends a promising rebound for the overall market as well.

Best of goodBUYs,