They teach you this stuff at technical analysis kindergarten.
Of course, in the real world, with our primitive monkey brains, implementing this into a trading system is easier said than done. Just take a look at the squeeze you’re seeing in real-time in all these beaten-up growth stocks.
The permabears started shorting these names in droves when they’d already slumped into 90% drawdowns.
Talk about a reckless strategy…
When we look at the most heavily shorted stocks, Coinbase stands out with a short interest of almost 30%. With clear levels and a favorable risk/reward, we leaned on COIN as a vehicle to profit from the short squeezes taking place in recent weeks. We’re seeing them all over.
Seriously, go through some of these charts.
Carvana, Tesla, and AI are all great examples — these moves are no joke. Bed, Bath & Beyond was up over 90% yesterday!
This isn’t 2022.
You can pretend like nothing’s changed, or you can get to making money on the long side. Those who don’t mold their strategies to new environments do so at their own peril.
There’s something liberating about turning the page on a new year. It brings new trends, new leaders, and, more importantly, new opportunities to make money.
By our estimations, stocks have been in a bull market since June last year. You can fight these moves all you want, or you can go for the path of least resistance and take the other side of these wreckless short sellers.
But in the same breath, this doesn’t give you free rein to loosen your risk management. Sure, we’ve made a tidy profit from our Coinbase long, but we always need to let money flow dictate our execution, sticking to our trading plan.
In this case, the plan was always to take profits on strength up near 83 bucks, should it manifest.
We’re not doing this arbitrarily.
83 isn’t a random number in some haphazard model; it’s merely where price last stalled. And you’re seeing the stock respect this level in real time.
So our target was hit.
It’s not complicated.
We take our profits off the table and see how the stock absorbs all this overhead supply.
It’s no different from how we’re approaching the price action in Bitcoin and crypto markets more generally. Bitcoin’s stalling at resistance, so we’ve put a pause on taking any new long positions at current prices.
The best we can do as fallible humans is to adopt some humility and let price action dictate our execution.
So with the stock trading back into the 70s, we want to be patient with this one for now.
Hell, any stock up +160% in two weeks deserves some rest.
And when the conditions once again align, we’ll be covering how we can make more COIN in this name.