Cup and Handle – Breakout imminent?

9/8/2022

Just how much more can the downtrodden hospitality industry take?

I remember when Covid hit, retail bought the dip on airlines as fast as they could, but left hotels alone.

Let’s not forget that disruptors like Airbnb (ABNB) had already put pressure on these traditional stalwarts…

…even when the places you book are full of “surprises”…

(Source: giphy.com)
But actual hospitality has become a central focus within the industry, likely because folks are soured on the poor service and sterile feel of your typical hotel.

Today’s company is one that aims to nail this down and provide “a better way to stay”.

Let’s look at Sonder Holdings, Inc. (SOND):

This is the 375-minute chart.

And if this looks like a Cup and Handle pattern to you, you’re in good company.

Let’s check the technicals…

Like most de-SPACed stocks, SOND has been bludgeoned ever since the ticker change…

Now, the old SPAC pattern doesn’t quite work like it did three years ago, but there is a new one that has developed.

Essentially, watch for the ticker change and then wait for a base once the share price falls an ungodly amount of percentage points…

The bottom of the cup here is the base and it appears that SOND is ready for a move to the upside…

On the Support side, I’ve marked the ~$1.70 area with green arrows. Resistance is a dollar or so higher at ~$2.75.

This type of pattern is great when it works out and, for the most part, the success rate is reasonably high… That’s not the same as a guarantee.

There’s a checkered flag by the composite Stochastic on Chris Hood’s Squeeze 4-Pack which is flat and therefore needs a little work.

(You want it pointing upward and above the zero line.)

However, the share price has been flat after moving up — a sign of consolidation prior to a breakout…

Volume has increased, although so has the Short Volume.

The difference here is that, despite the increased shorting, the stock hasn’t fallen.

Sounds like the bears could lose this one…

If you take this for ride, know your levels and when to hit the brakes.2

Keep moving,

(Disclosure: I hold no position in SOND, but intend to initiate a position in the next 30 days.)

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.

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