Can the Cloud Business Save Meta? 🌤️ The Morning Print

Good morning! 

Meta had one of its best days in several years yesterday following reports that the company is launching its own cloud business.

The timing of this catalyst is notable, as it came at a key inflection point relative to the S&P 500.

Let's take a look.

Meta has been one of the market's biggest underperformers this year.

Just last week, the stock broke down from a massive top relative to the S&P 500, falling to new two-year relative lows.

Yesterday's rally pushed Meta back into a major confluence of resistance, defined by its prior cycle highs and the 200-day moving average.

The last time Meta broke below its 200-day moving average versus the S&P was in October 2021, a move that preceded the largest drawdown in the stock's history.

Conversely, when Meta reclaimed the 200-day moving average, it marked the beginning of a multi-year period of outperformance.

As the largest holding in the Communication Services sector, a sustained relative breakdown would likely have an outsized impact on the group, and it won't be positive.