Price Action Case Studies

Here are a few Price Action Case studies for today.

How AMD stock has rallied in 2021?

AMD stock created a bullish base at $73 and finally took off in May and rallied to $120. It was a 64% move before the stock pulled back and retested prev high of $98-99. The new traders have entered the stock between the 100-105 zone and hope that the momentum would continue. 

How CLF broke down and disappointed?

One stock I was consistently bullish this year: CLF. The Infrastructure bill and the return of pricing power in commodities made me very bullish on the stock.

As you can see in the chart above, CLF consistently found support at 100 dma and rallied from $14 all the way to $26, literally doubled in value. Every dip to 100 dma on the way worked like magic but then thanks to Chinese Evergrande panic drama, CLF broke down below 100 dma with a gap down. It found support at 200 dma and it looks the stock is pulling back with the market. The breakdown means one is better off staying away.

The Choppy Trading Drama: Novavax NVAX

NVAX stock price action is an excellent example of why it has been so hard to trade in 2021. There is just no price action consistency. Traders get extremely bullish one day and then extremely bearish the following week and you get no idea how to react to it.

This is the problem with Biotech stocks. One day they will change the world, and the next day the company will look hollow. Just look at how the stock has navigated over the last six months. Novavax is a  promising company and today it’s up 10% on news of applying for WHO approval of its Covid Vaccine. But with so many twists and turns, how can one trade such stock.

Why I will buy Blackberry now at 10.94?

The best time to invest in a stock: When the stock Gaps up on fundamental news flow like earnings.

Blackberry is not a meme stock. It’s a genuinely solid stock for the future. It’s not only a cybersecurity play but building an operating system for connected cars. It’s extremely undervalued in relation to what it can do. 

What can we learn from Affirm Trade?

Never ignore a small story because it causes a spark that leads to outsized gains. I recommended Affirm because Square did an acquisition of AfterPay a similar firm for $29 billion in early August 2021. 

Affirm stock traded sideways for nearly 20 days before the news of the Amazon partnership came out followed by solid business update and in matters of six months, the stock delivered returns of 70%

When it comes to good stock, little patience helps. Example CRM

The best stocks are the stocks that make a new high on the back of strong fundamentals. CRM Salesforce stock was underperforming but then came out with a strong earnings report and gave bullish guidance and solid management commentary on Slack acquisition. The stock made a new high above well-defined resistance and even did a Gap up. Due to volatility in the market, the stock corrected to retest prev resistance as support, and just see for yourself where the stock is right now

Why the stock is up today? The management came out and upped the revenue guidance.

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers