01/20/2022
Now a party supply company’s stock continued to rise during the time of COVID-19 is beyond me…
But like all good things, the party must come to an end.
I got wind of today’s subject around the time it began to move from the world of pennies and it will go down as one of those missed opportunities.
(Always keep a folder of these for studying!)
However, there’s always money to be made on the the backside of the trade as well…
And regardless of what some folks may say, going short and riding the trend is not the same as shorting a stock for nefarious purposes.
Today, we’re taking a look at Party City Holdco Inc. (PRTY):
I’m running today’s chart back to November of 2021 on the daily time frame.
Not pictured is the bottomed out portion, but just so you know, PRTY was trading at around a quarter for some time…
And a little over a year later, it printed above $11.00 for a 4,153% gain…
A bit of a stretch, yeah? Bingo.
From the low to the high, I’ve drawn a Fibonacci Retracement to look for areas of potential support and resistance. It’s playing those levels well…
But first, you can see on the lower chart where the On Balance Volume, RSI, and MACDwere all in agreement and presented a bearish divergence.
Price up. Indicators down.
There’s also further confirmation
The share price fell to the 23.6% level before eventually shaking out to the 50% mark and then struggled to hold the 38.2%.
Now, PRTY is attempting to hold a critical area and that’s the 50-61.8%…
If the 61.8% fails, I’d prepare for more downside. The price action appears weak, so this is likely the case.
I know this is a busy chart, but take a look at the green dotted trendline… See the continued failure of the share price to break above?
Weak.
And the Head and Shoulders pattern proves it. The white arrow points out the break of the neckline and where the stock was rejected.
This is the reason I emphasize drawing trendlines over everything else…
You can use a trendline to pick your shots and, judging from the chart, I’d watch for another test close to the $6.00 mark for a short opportunity to the 61.8% Fib level.
But if you really want to crash the party, check out the volume gap highlighted to the right on the Volume Profile…
…and the price gap below it highlighted in green.
This could be the final target.
Make money both ways
Keep moving,
(Disclosure: I have no position in PRTY.)
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.
