Ep 178: Spotify IPO, Trade War Talk, & Stock Market Charts

April 5th, 2018

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Today what I'd like to do is:

  • Discuss a couple of news tidbits that are going on in the marketplace - we'll talk about the Amazon news and the tweets that are going on here
  • We'll also look at US-China trade war talks
  • Talk about some IPOs like the Spotify IPO that's recently announced and released in my thoughts about trading IPOs

if you want to see more of the stock charts, visit https://tradersfly.com/

We have Trump that constantly talks about Amazon

It did hurt the stock a little bit, but that's not to be unexpected from all the volatility that we've had along with Amazon's price being a little bit up there.

As you look at Amazon overall and you take a look at the weekly chart, you can see we've already had a reasonably accelerated move. Then when that broke down, that's a lot of the times are opportunities where the tweets were taking place.

If you want to look at the acceleration of the move right here, you can see we broke this actually in a clean way a little bit earlier. Over here, we broke it, and now we're trying to hold up right there at this price point which is about 1350/1355.

We might be getting a couple of days of bounce here, but then we'll see if we roll over or can hold and stabilize here. Remember, earnings are coming up around the corner within about a week to two weeks, so we should see some fuel or a little bit bad selling in the marketplace. Whether that happens to Amazon or any other stocks, you're going to get some fuel one way or the other, whether that's to the upside or fuel to push stocks lower.

As far as looking at Amazon and imposing specific rules and threats on Amazon, I think the company is quite large and significant. I think it would be a little more challenging to do that especially when you know the party that you represent, as far as in the white house, is also pro-business. You are always for helping businesses out, but with Amazon being so big I'm not sure if you can single one company out to impose higher taxes or restrictions. Because that would also mean you'd have to impose that at certain limits as you go into tiers just like you would with income taxes.

China talks and the China tariffs

With that in mind, there's been a lot of movement and whipsaw action as well within just overall futures because of China talks and the China tariffs.

This of course started with the US. We said we're going to impose steel and aluminum tariffs. China retaliated slightly to compensate for it. Then the US said, we're going to hit you with more significant tariffs because of intellectual property, the pirating that goes on. And China said if you want to play that game, we'll play that game too. You can't stomp and go head-to-head with other countries when you're living in a connected society.

In the connected world, as Stephen Covey said, you have to create win-win situations and win-win relationships. It makes things much more difficult when you're trying actually to fight and win things rather than create synergy together. As you probably know, the administration that we have now is looking to strong-arm things rather than create a win-win solution for everybody.

With that in mind, it creates a lot of tension, especially in the marketplace. That's one of the reasons why we're getting a lot of the whipsaw action, especially over here as you take a look at it with futures that we're down pretty big and then we got snapbacks.

Overall, when you look at the days that are red, there's quite a lot more here than when you compare it over here. You have many more red days there that are coming into play recently.

Now, some positive news for new investors

If you're looking for investing in a new IPO, Spotify did get released, and it's called spot. This is a ten-minute chart. You could see we opened up about 165. For me, when I look at IPOs, I don't care to invest in IPOs, at least not the first month or two. Usually, I like to give them a couple of months of digestion. It doesn't matter what the company is, because a lot of them do fail. But some do work out, and they may have some right movements in the first few months and then maybe that's it, and they're done.

If you were the first one here to get in, you could see there was a lot of people dumping shares because the early investors that got in it many years ago are trying to dump and maybe get rid of shares. Some of them are locked in play, and they can't get out of those shares, but they will eventually. It could be three months or six months that they have to hold in the open marketplace that way they all don't sell at once.

You can see here we did have kind of a descending trendline. We had a bounce right there and now again descending trendline.

If you compare this to kind of GoPro and you take a look back at the weekly, you can see what happened when we went sideways for about a month or two. And then finally we had a breakout

This is what I'd rather see is a nice little consolidation pattern, and then either a breakout or a breakdown is okay too because eventually, that will set things up.

Now, if you have an active breakout, this means you need to be a little more careful and take profits into strength because you get too far too fast and that's when you can get some severe pullbacks. This is what happened with GoPro.

Every company is different, so it depends on your profits, your growth, what you're looking to do and expand in the future. But if you were to compare it kind of to other services like take a look at Pandora, they charge as well similar prices, and this is what the stock did.

I am not saying Spotify is going to be identical to this, but I'm just saying this gives you an indication of a music service around the same price bracket. You might have a breakout here, and it might be useful for one, two, or three years, and then after a while, things just declined. Unless of course if you think Spotify has some other potential growth behind other products other services that they will develop.

Other than that I think the growth is a little more limited. It doesn't mean it can't be profitable. That doesn't mean it can't make money. It doesn't say you know the company or the tool is not a great tool to listen to the music. It just means as far as an investment goes, there's not going to be as many people piling into it right away at the beginning.

If they start acquiring things, like Facebook bought Instagram, and building that infrastructure out, now as an investment it may be more attractive. But as far as just a single music service, it's a lot more limited I think for now. Of course, that could change.

CMG

This one's been moving sideways for quite a while. I wonder if it's ready to break out one way or the other, whether up or down.

If we take a look at this one, it's been based here for quite some time now. So, I wonder what's going happen because the moving average is starting to get closer. If we break out, you might get a move slightly to the upside. I don't think it's going to be a significant long-term stock at the 700s again, but it could be you know for one to two month hold it might be interesting.

Tesla

Tesla broke down below that 300 level. Now, it's getting back above it, so we went into the 250s, and now we're trying to hold that price level.

We're back in this descending triangle pattern. I think we'll have again a little more whipsaw action, if we don't get a rejection tomorrow because remember stocks are popping quite a bit today or the last couple days.

Netflix

Netflix is also holding this level at 275/280 level. It's still under that moving average, under the 300 level. The moving average is slightly rolling over. So, we'll see if this is just a two/ three-day pop and then we'll come back and maybe retest that price level again.

Apple

If we take a look at Apple, also, 165 seems to be the support level. We've had some action that took place around this price point. The moving average is right there, so that could be a nice little area to build a position.

But when you look at it, and you start looking at it on a weekly timeframe, we've just been moving sideways over the last one to two years.

I don't know if this is more of a growth company anymore, it's more of a steady dividend play. It had some excellent consolidation sideways, and that could allow it to continue to run further to the upside with time, but they will need new products because their product cycle is the phones get old fairly quickly over time.

Facebook

If you look at Facebook, also the longer-term upward trend line here is this angle. We did, for a short period, accelerate for about a year at that angle but we got too far stretched. That's why you get that pullback, so now we're coming back to more normal levels.

If we break below this, that could create a little bit of trouble, and you could get into the 125s level there.

But we'll see if that'll happen. I'm not sure if this if we're going to get a shorter term bounce and then sell-off or you get a shorter term bounce and then you could continue moving higher. But ultimately, the line here is the key - that upward line, and you can see that being drawn out for that extended period since about 2013.

PepsiCo

I've been taking a look at this line in this angle for this stock. It did break below it, in fact, it broke below it a couple of times, and then it got saved, and now again it broke below it.

The question is, will it get saved again? Typically, these lines become resistance, so we'll see if it rejects it. But if it gets back in it, then again, you could continue following that trend forward.

P&G

P&G is also a popular one for many longer-term dividend investors that we have in our member's area. This one you want to be careful with the $80 level because it's struggling. It broke below this, and it's rejecting a little bit at that price point.

If we get above 80, that's a little bit safer, but otherwise, the big trouble here is right around that 92/93 level. If you take that back into the quarterly, you can see that all the way in 2014-2015 coming up right there and the angle is moving around that pace.

Shopify

Shopify also reasonably big one we came into this daily area of 110. We have some resistance over here that now supported breakout holding at those price points. And we broke below it, but we got a little bit above it now and again we're acting weak.

When you look at the area of this recent price action, it's quite oversold. So, I think we may get a little bit of a bounce here if we can hold this 120 level with Shopify. But overall, price actions is acting weak.

If you get further panic in the market's earnings, this could continue to accelerate lower. And if it gets below that 200-day moving average, that could become a problem.

I want you to be a little more cautious. Don't buy into the hype that goes on. Sometimes you need to hedge or protect things. But overall, be a bit more careful.

Be a little calmer in these volatile moments. If you weren't a little calmer, I would say trade a little lighter because I know sometimes it is a bit more challenging to be calmer. When things are whipsawing around, you should trade lighter. Instead of a thousand shares, go to 500 or 300 shares. If you're trading 300 shares, go to maybe a hundred or fifty shares instead. Lighten up your positions just because you want to see the trend or direction.

Right now, we haven't seen a direction. It's more or less a lot of whipsaw noise action. So you get a whip down, whip up, whip down, whip up. It's a lot of noise, but there's no either trend.

Author: Jorge Diaz

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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