GoPro (GPRO) down 2% and it’s a good thing??! Here’s the analysis. (October 01, 2014)
GPRO SP-500 GPRO SP-500 GPRO
I want to look at GoPro ( NASDAQ:GPRO ). Here’s the thing, the market sold off pretty nasty today in a pretty big way, and GoPro ( NASDAQ:GPRO), down 2 percent. Well, all things considered after the way this stock has run as high as it has, it’s up over 100 percent. On a really, really crappy day in the market for this stock to be down just 2 percent that’s pretty good.
Also, look at the volume, higher than average but not anything like the last couple days, not anything like that. So this stock has been moving up on really strong volume, a lot of buying activity and then today when the market’s lousy this stock just barely budges, it just drifts below the upper Bollinger Band, that’s really bullish.
Let’s look at the 5-minute chart, look at where all the volume actually occurred. A couple days ago it was there, this big scream, this big pop on Tuesday and then earlier today, we get this big huge volume spike first thing in the morning, the stock gaps down and this is a really big wide ranging time, and then it drifts lower for most of the day until finally hitting bottom at 2:00 then when it’s drifting higher. So compare that to the S&P, which just continued to go lower. All things considered I look at today’s action as pretty bullish.
What I would suggest doing, I still think this stock has a $100.00 price tag on it, you do the math on a percentage basis and this still has some pretty significant upside. I would look at today’s intraday low as your reference for stops. The low is 88.87, literally setting a stop at like 88.80, something like that, if you want to take this momentum trade like this, that’s going to work for you.
An alternative way to do it, and this would actually be my preferred way, is to take a small amount of shares right now, because this is very extended it’s over extended very much so. So you could take a small amount of shares at this price level, and then depending on your thesis, if you like this thing for the long-term hopefully the stock drifts lower. Remember, you’re in on a small number of shares, hopefully the stock drifts lower you can get it like some for closer to $80.00, you’ve lowered your cost basis.
If on the other hand the stock continues to move higher, and I kind of think it will, not guaranteeing, but it sure seems like it’s going to, if the stock continues to move higher and by the way it’s a short squeeze, shorts are trying to cover, they can’t get enough shares, they’re trying to cover; I don’t think you can borrow shares on this now, I think that’s true but I don’t know for sure.
Anyway, if the stock does continue going up at least you have a small position and you can add to it but you’re making money. The point for this whole video is simply this; I think this is really bullish price action in light of the entire market. So you use this level here this area here, as you line of demarcation, as long as the stock stays up above this level you’re good to go. If it starts drifting lower you know it can fall appreciably lower than that.
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