06/03/2022
In just one week, investors have convinced themselves that the market has reset and is ready to climb to all-time highs by the end of summer…
They’re not completely wrong though because it could happen.
(Source: tenor.com)
Indeed, it’s likely that there are more earnings misses and poor numbers to go around.
But if you must go long right now, the name of the game is relative strength… and I mean relative strength to the market and its competitors.
One that’s down over 75% since its peak in November and just “sold off” without truly selling off is Digital Turbine, Inc. (APPS).
Take a look:
Above is a look at the daily chart and we’re focusing on this rather than shorter time frames to really nail down the swings.
You might have seen the miss on earnings, but maybe this is a “bad news is good news” type of thing…
Get a look at the resistance channels (red horizontal bars) and again, the Standard Deviation Channel.
The Standard Deviation Channel shows us that the stock will need one hell of a catalyst to reverse in this environment.
Usually, I’d point out the support channel, but… there isn’t one.
The closest thing to support is the recent test of the 78.6% level on the Fibonacci Retracement which is circled in green.
APPS has its work cut out for it, but this is the case for most of Tech…
The red arrows mark where each test will be according to the resistance channels around $30.00, $41.00 and finally, $45.00 — if the price action even gets there.
The $30.00 area is the local resistance after APPS leveled down (white box), but a break above here would also be a signal for a trendline breakout from the Falling Wedge…
If you were looking for important Fibonacci levels, the ~$41.00 resistance is right at the 61.8% mark (red circle).
These are great levels to note if you’re trading options or looking to swing trade and there’s plenty of open space after the ~$30.00 mark.
Now, I’ve noted the potential trendline breaks with white arrows… something to watch for.
The lower indicators, namely the Squeeze Trading Tool 1.0 and Squeeze 4-Pack Beta from Chris Hood are showing slight bullishness (white arrows, respectively).
However, I wouldn’t get my hopes up… The RSI and MACD both look a bit weak.
And if you needed another mixed signal, the Volume indicator shows that despite the earnings gap-down, the change in share price isn’t commensurate with the volume.
In fact, yesterday’s volume showed massive buy support.
I’ve highlighted what I believe is the likely scenario and, in this market, I’d short each pop until that upper trendline is broken…
(Disclosure: I hold no position in APPS.)
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.
