SHOP has sold off 11% in the past week. Earnings coming on 22nd. This looks like pre-earnings profit taking, which also suggests there may be a pre-earnings bump late next week. SHOP is also testing a reliable trend line for the 5th time and the 20MA for the 3rd time. Looking for entry confirmation with RSI or bullish candle.
SHOP is one we called out as a top earlier this month after a major midday reversal that came with no news and in concert with similar reversals in other extremely overvalued new-industry tech names. The trendline is now under pressure.
Expect this to fail and hit that rising wiggly blue line (the 50-day MA) Next. Ultimately, the $700 club is coming here.
SHOP already touch support it may bounce and go to touch resistance.
The ADX indicator is still above 20 (25 right now) wich means the uptrend is still running.
(this is just my opinion, do your DD)
Adding to the maximum stupid series is Shopify. Look at that bullshit. If nothing else people are going to start taking profit after such a massive run up.
There is a reason I am buying puts, I can fix my lose in case things keep getting stupider and I end up being the stupid one for trading against the stupid.
Oct 2020 800 puts.
Cheers,
-Sherem
Shopify is getting attention for its ultra-rich valuation. Stochastic %K dipped lower on Monday, compared to June 24, and %D has crossed below RSI. Since stock traded below the low of Monday's bearish engulfing candle (with volume), I think today's buying will turn over as more people take profits.
I bought 7/17 850 puts for 2.90. Volume is low on these...
An idea for SHOP
Short areas for traders in red
However this probably isn't the best short out there, picking tops isn't very wise. Boldness pays however.
SHOP went from up big to down big on Monday after a historic run. This is dead center in the heart of what has been "bubbly" in this market.
If long SHOP (at 50x forward sales), run for the hills. The question remains as to whether or not this is also a warning signal for the larger tech bull trend.
Just a quick chart showing Shopify's price-to-sales ratio, which is nearing 70. That means investors are paying $70 to get $1 in revenue from Shopify. I have yet to see a large cap stock of this size trade at a multiple like it. Truly amazing to see.
No comment if it is overvalued or undervalued. But, it is high up on my watchlist for future volatility and I...
I WOULD GO LONG IF SHOP CAN BACKTEST THE 1000 LEVEL.
TRADE IDEA: 1075C 7/10
I WOULD GO SHORT IF SHOP BREAKS UNDER 1000.
TRADE IDEA 925P 7/10
levels below 928 are 900, 875.
