03/29/23
You’re spending the night at your best friend’s house on a Friday night.
The pizza rolls are fresh out of the oven.
You have two movies from Blockbuster, the new Mortal Kombat on Sega – and you are absolutely melting into a beanbag chair.
Life is good.
Okay, I’ll admit today’s stock has me feeling a little nostalgic – both for my childhood and a couple years ago – when a beanbag company was one of my best investments.
It’s hard to believe that a stock can jump on slightly better than expected earnings (+0.87% sales, +9.76% revenue), but in this market, just about anything will do…
Let’s look at the company formerly known for selling beanbags, The Lovesac Company (LOVE):
We’re checking out the hourly chart because, frankly, I don’t believe anyone’s interested in holding on to stocks that gap up in this market environment…
Get in. Get your money. Get out.
This is a risky trade, so here’s what I’d watch for…
I’m ignoring the indicators on this one considering massive leaps like the one LOVE made are rarely good candidates for signals.
Not to mention, there are very few that forecast where price is headed due to the lag…
At the top left, I’ve highlighted the key level of breakdown in red, just under $28.50.
The swing low where I’ve boxed off is what happens when support becomes resistance…
We’ll come back to this in a moment.
Looking to the bottom, you can see that the low $20.00’s were swiftly rejected.
The green box marks off where a new level of support was created after many of the bulls were likely purged from their positions at the lower low…
(We’ve all been there.)
Notice how that green candle attempts to move higher, falls, and then its range becomes the only thing holding the stock from falling.
Now, the gap up printed a high of $28.75 and I’ve accounted for this in the Fibonacci Retracement…
…It’s not a coincidence that the share price failed to close above where it previously broke down.
Using these levels, the last level of resistance close to $25.50 was blasted through and it just so happens that this is a prime buying area based on the “Fibs”.
Bottom line, if the price can hold around ~$25.00, I believe LOVE may have some gas left in the tank.
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.
