Covering Goedeker ($GOED) today for a favorable long set-up (taken from our tradingroom)
Fundamentals:
1847 Goedeker provides a one-stop e-commerce destination for appliances and furniture. Recently Goedeker announced (27-5) and completed (2-6) an underwritten public offering on which it dropped to a sell-off extreme of $1,80 at the point where pricing of the offering was yet uknown. When pricing was accounced @ 2,25 the stock started a very swift recovery. Interestingly it has never traded below 5$ until just recently. As per close of yesterday the stock is sitting @ 3,17 and we still believe it is undervalued on a fundamental level at this price given the huge increase of order inflow specifically in the appliances branch (read earnings summaries of 2020 and first Q's of 2021).
As we are technical traders and trade price action, we do not bother much about fundamentals but it is always nice to have them on your side. The company has tailwinds as the COVID pandemic resulted in a boost of online sales and defered spending by consumers. Sales are picking up as a group of consumers will chose to spend helicopter money and holiday money on appliances. Written orders over FY 20 were up 99%, record results were booked in Q1 FY 21 and we expect this trend to accelerate at least during Q3 of 2021.
Read key investor information here to get an understanding of the company and do own DD on the investors relation section.
Technicals::
Starting from the left of the chart on the 4 hour $GOED has been forming a base in the $5.50 zone. It has a crazy spike at the end of October 2020 (26) on news of selling it's divisions (worth very much to look up and read the article) and broke the upper band of the trading range @ 8,81.It sold off quickly and fell back in the trading range between 5.71-8.81. Bottom trading range support was tested and held. Top of the trading range got tested followed by a huge break-out through the $14 range. As from that buying climax it sold-off back to the bottom of the previous trading range to again find support. News of the public offering led to a break-down below base support and a drop to $1.80 after which it bounced very quickly when offering price was announced @ $2.25
Given the gap down and profit targets marked in the graph, this provides an opportunity for a swing long position with attractive risk-reward levels. Pivots and key-levels are very clear and initial recovery to the EMA 21 @ $3.60 is the first target. As from there we have room for profit to:
Target 1: fill the gap (above 3:1 on a tight stop)
Target 2: reclaim base support (6:1 on a tight stop)
Target 3: retest break-out level / upper band of the trading range (11:1 on a tight stop)
Target 4: another break-out provides room up to $14 (insane:1)
To enter a position we first wait for confirmation a bottom is in, we do never want to do bottom guessing on a falling knife or in any other situation! We want to trade reversals and break-outs with confirmation to avoid ending up in a losing position direcly; yes we miss some upside from not buying the bottom (which is impossible to tell) and pay for extra chart confirmation that provides us direction. After hitting oversold we bounce back to 2.25. We let it break this level first, wait for a retest to get confirmation as pivot support and wait for further buy signals on the chart. We look up to the first 4H key resistance level of 2,9 which will be our entry if a break-out occurs on solid volume.
Buy signals are present with stochastic oversold on the 4H and daily, volume confirmation for reversal on the hourly and MACD cross on the 4H. Volume on the weekly is twice the volume of the sell-off in the prior week.
We enter long with a buy stop @2,92; simultaneously set a trading stop @2,7 to let the trade evolve from there and give it enough room. Worst case scenario would result in a loss of 0,22 per share, best case scenario’s as provided above, all have reward-risk ratio’s 3:1 and far greater. The loss will be small, the upside potential is enormous. With current day-trading momentum this can result in a big run up turning this trade in a swing.
Price action trading is based around chart patterns, key levels, likely scenario’s and risk to reward levels when entering a position. $GOED technicals provide for very clear pivots and resistance areas with a confluence of technicals in favour of a first test of the EMA 21 around $3.60 on the short term. On the medium and long term there is room and potential for big upside. Stops provided are indicative and should be set in accordance with your risk tolerance. As support levels are zones we use the technical stop levels and not the risk adjusted stop levels.
As always this is not investing advice but our personal view based on technical analysis and price action. Any trade you take can result in a loss and you should always trade with a stop-loss to limit your downside risk. We trade for money, not to hold stocks at any cost. Trading is at your own risk and discretion.
HOTW Trades
Fundamentals:
1847 Goedeker provides a one-stop e-commerce destination for appliances and furniture. Recently Goedeker announced (27-5) and completed (2-6) an underwritten public offering on which it dropped to a sell-off extreme of $1,80 at the point where pricing of the offering was yet uknown. When pricing was accounced @ 2,25 the stock started a very swift recovery. Interestingly it has never traded below 5$ until just recently. As per close of yesterday the stock is sitting @ 3,17 and we still believe it is undervalued on a fundamental level at this price given the huge increase of order inflow specifically in the appliances branch (read earnings summaries of 2020 and first Q's of 2021).
As we are technical traders and trade price action, we do not bother much about fundamentals but it is always nice to have them on your side. The company has tailwinds as the COVID pandemic resulted in a boost of online sales and defered spending by consumers. Sales are picking up as a group of consumers will chose to spend helicopter money and holiday money on appliances. Written orders over FY 20 were up 99%, record results were booked in Q1 FY 21 and we expect this trend to accelerate at least during Q3 of 2021.
Read key investor information here to get an understanding of the company and do own DD on the investors relation section.
Technicals::
Starting from the left of the chart on the 4 hour $GOED has been forming a base in the $5.50 zone. It has a crazy spike at the end of October 2020 (26) on news of selling it's divisions (worth very much to look up and read the article) and broke the upper band of the trading range @ 8,81.It sold off quickly and fell back in the trading range between 5.71-8.81. Bottom trading range support was tested and held. Top of the trading range got tested followed by a huge break-out through the $14 range. As from that buying climax it sold-off back to the bottom of the previous trading range to again find support. News of the public offering led to a break-down below base support and a drop to $1.80 after which it bounced very quickly when offering price was announced @ $2.25
Given the gap down and profit targets marked in the graph, this provides an opportunity for a swing long position with attractive risk-reward levels. Pivots and key-levels are very clear and initial recovery to the EMA 21 @ $3.60 is the first target. As from there we have room for profit to:
Target 1: fill the gap (above 3:1 on a tight stop)
Target 2: reclaim base support (6:1 on a tight stop)
Target 3: retest break-out level / upper band of the trading range (11:1 on a tight stop)
Target 4: another break-out provides room up to $14 (insane:1)
To enter a position we first wait for confirmation a bottom is in, we do never want to do bottom guessing on a falling knife or in any other situation! We want to trade reversals and break-outs with confirmation to avoid ending up in a losing position direcly; yes we miss some upside from not buying the bottom (which is impossible to tell) and pay for extra chart confirmation that provides us direction. After hitting oversold we bounce back to 2.25. We let it break this level first, wait for a retest to get confirmation as pivot support and wait for further buy signals on the chart. We look up to the first 4H key resistance level of 2,9 which will be our entry if a break-out occurs on solid volume.
Buy signals are present with stochastic oversold on the 4H and daily, volume confirmation for reversal on the hourly and MACD cross on the 4H. Volume on the weekly is twice the volume of the sell-off in the prior week.
We enter long with a buy stop @2,92; simultaneously set a trading stop @2,7 to let the trade evolve from there and give it enough room. Worst case scenario would result in a loss of 0,22 per share, best case scenario’s as provided above, all have reward-risk ratio’s 3:1 and far greater. The loss will be small, the upside potential is enormous. With current day-trading momentum this can result in a big run up turning this trade in a swing.
Price action trading is based around chart patterns, key levels, likely scenario’s and risk to reward levels when entering a position. $GOED technicals provide for very clear pivots and resistance areas with a confluence of technicals in favour of a first test of the EMA 21 around $3.60 on the short term. On the medium and long term there is room and potential for big upside. Stops provided are indicative and should be set in accordance with your risk tolerance. As support levels are zones we use the technical stop levels and not the risk adjusted stop levels.
As always this is not investing advice but our personal view based on technical analysis and price action. Any trade you take can result in a loss and you should always trade with a stop-loss to limit your downside risk. We trade for money, not to hold stocks at any cost. Trading is at your own risk and discretion.
HOTW Trades