PTON - Shorting the fancy hamster wheel for quarantined moms
PTON has had a tremendous run over the past few months going from approximately 30 dollars to above 160. Over a 500% move. Makes you question how much its really worth doesn't it. Well we are about to get the answer soon. PTON has formed a head and shoulders that has taken 5 MONTHS to form. On May 5th we had our breakdown with VERY HIGH VOLUME where PTON broke through its 100 support, which acted as support for 5 MONTHS. Right now PTON looks like it is going to retest the previous 100 support level. My opinion, when it gets there the 100 level will become a resistance. PTON will then continue on its bearish move to its next highest VPVR region of 70 to 60 dollars. That is almost a 25 to 35 dollar move from where we are currently. If things get really hairy then we are going down to the next VPVR level, which is where I think we will end up at the end of all this, the 45 dollar level. A 50 dollar drop from where we are as of this post (95.19).
There are two very important things to consider here...
1) The amount of time it took for the pattern to form
Patterns are stronger on higher time frames. A head and shoulders on the daily that has taken 30 days to form will be stronger than one that has taken 10 days to form. This pattern is on the daily and has taken 5 months (5
MONTHS!!!!) to form. I cannot stress how important the length of time frame is. A head and shoulders is thought to be a very bearish pattern, combined with the long time frame gives the bear thesis for PTON lots of strength.
2) Breakdown of support with HIGH volume
Breakout trading requires breaks at specific price levels accompanied with high volume. Here we have a breakout to the downside at the support level of 100 with extremely high volume. By extremely high volume I mean
almost 3 to 4 times the average volume on the daily.
3) The end of quarantine (OPINION)
I don't know about you but I'd rather be outside on a bike than inside. Although I still don't know how to read through the fundamentals, the end of quarantine will for sure bring an end to the work out from home craze. Bringing
the sentiment of PTON down. Most people love going to gyms to be around other who are working out or going outside and enjoying nature. With less restrictions coming in the upcoming months, I highly doubt people will want
to be peddling and looking at nature through a small screen and would rather be peddling outside.
Combining all of these aspects has led me to the bear thesis for PTON.
Happy Trading!
"The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless" - Jack Schwager
There are two very important things to consider here...
1) The amount of time it took for the pattern to form
Patterns are stronger on higher time frames. A head and shoulders on the daily that has taken 30 days to form will be stronger than one that has taken 10 days to form. This pattern is on the daily and has taken 5 months (5
MONTHS!!!!) to form. I cannot stress how important the length of time frame is. A head and shoulders is thought to be a very bearish pattern, combined with the long time frame gives the bear thesis for PTON lots of strength.
2) Breakdown of support with HIGH volume
Breakout trading requires breaks at specific price levels accompanied with high volume. Here we have a breakout to the downside at the support level of 100 with extremely high volume. By extremely high volume I mean
almost 3 to 4 times the average volume on the daily.
3) The end of quarantine (OPINION)
I don't know about you but I'd rather be outside on a bike than inside. Although I still don't know how to read through the fundamentals, the end of quarantine will for sure bring an end to the work out from home craze. Bringing
the sentiment of PTON down. Most people love going to gyms to be around other who are working out or going outside and enjoying nature. With less restrictions coming in the upcoming months, I highly doubt people will want
to be peddling and looking at nature through a small screen and would rather be peddling outside.
Combining all of these aspects has led me to the bear thesis for PTON.
Happy Trading!
"The hard work in trading comes in the preparation. The actual process of trading, however, should be effortless" - Jack Schwager