Offbeat Ideas and Commentary from the Depths of Gil's Trading Notes
Review of Stocks Discussed in Last Weekend's Report: SNAP, SWCH, and ROKU
Snap (SNAP) failed to hold the "voodoo" pullback to the 10-dma last week, but it does illustrate how those who play the VooDoo side of the market must remain flexible and seek to invoke the Ugly Duckling as appropriate when a VooDoo pullback and set-up doesn't work out. Persistence is always critical in achieving ultimate success, and we have both the VooDoo pullback and the Ugly Duckling U&R set-up at our disposal in the exercise of such persistence.
Here we see that while SNAP failed to hold the 20-dema, reversing back down through the line on Monday, triggering a quick stop-out, it did set up again. This time, however, it was not VooDoo at work, but the Ugly Duckling as SNAP undercut the prior 14.10 low in the pattern from early October on Wednesday and then rallied back up through it on Thursday, triggering a U&R long set-up at that point. If one was alert to that it could have been acted upon as soon as it crossed back above 14.10, but it is now extended after closing at 15.44 on Friday. Earnings are expected on November 7.
Switch (SWCH) was discussed as a hot recent IPO gone cold that should be watched for a possible U&R long set-up. Earnings are expected on November 13. Here we see the stock holding tight along the 18.50 price level and just below the 10-dma as volume continues to dry up. Last weekend, I noted the U&R set-up that had occurred on the prior Friday, but that went nowhere. There was another U&R attempt on Wednesday which also went nowhere. On Friday, a third U&R set-up occurred with the stock closing 17 cents above the prior 18.82 low. SWCH doesn't report until November 13, according to a company press release, so it still has some time to move higher from here, creating a potentially favorable U&R trade ahead of earnings.
Right here the third U&R is in effect, using the prior 18.82 low as a tight selling guide. However, given that the stock has formed a tight seven-day price range along the 18.50 price level, one could give the stock a little more room and use that as a selling guide. Speaking for myself, I want to see the U&R work by holding above the 18.82 low, no matter what. So for me, the 18.82 low is used as a tight selling guide, with the idea that I'm perfectly okay with re-entering the trade if it sets up by again moving up through the 18.82 low.
Roku (ROKU) is another hot IPO that has now cooled off considerably and has yet to show any kind of long entry trigger. Since last weekend, ROKU has continued to drift lower, closer to its $14 IPO price, without rallying back above the prior 20.77 low. Earnings are expected on November 8th, so we may not see anything occur until after earnings are reported.
