Snap (SNAP) was about as stretched as it could be. Now it’s on the move the other way. Here’s your trade. (August 22, 2017)
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We are looking at Snapchat ( NYSE:SNAP ) here. This has not been a crowd favorite in the Fitzpatrick household, but I am long now. Let’s get into that.
First of all, I really think Snapchat ( NYSE:SNAP ) should be in single digits. I think ultimately it will be. I am not prejudiced against the company, though I don’t have a Snap Twit account. But Facebook ( NASDAQ:FB ) is kind of beating the snot out of these guys with Instagram. They are copying everything that Snapchat ( NYSE:SNAP ) does. I don’t know whether they are doing it better or worse, because again, I am not a ‘Snapchatter’. The stock is worth something. And the fact that Facebook ( NASDAQ:FB ) is a huge competitor with Snapchat ( NYSE:SNAP ) is not the only news tidbit.
Apparently, I forget the name of the company but it is a media marketing company, yesterday, issued a report that projected that Facebook’s ( NASDAQ:FB ) users would actually decrease because of the young crowd, tweeners or something like that, that are not using Facebook ( NASDAQ:FB ), they are actually tending more to Instagram, which by the way, is owned by Facebook ( NASDAQ:FB ), they are tending to use Instagram and Snapchat ( NYSE:SNAP ) more than Facebook ( NASDAQ:FB ). I am not talking about Instagram or Facebook ( NASDAQ:FB ) here. Again, Instagram is owned by Facebook ( NASDAQ:FB ). That is good for Facebook ( NASDAQ:FB ). And by the way, Facebook ( NASDAQ:FB ) isn’t hurting. It is squeezing, it is probably going to go higher.
With Snapchat ( NYSE:SNAP ), the thing is, that article is something that, from an investor’s standpoint, would bode well for somebody who is looking for a reason to buy Snapchat ( NYSE:SNAP ). I think at this point when you see this kind of volume like this big massive red bar followed by a big, massive green bar. You can see how the stock traded on the red bar day. Here is how it traded on the green bar day. This was a bullish engulfing pattern. This marks the bottom of the stock right here, right now. Now we are seeing the stock trade higher. The fact that after yesterday’s little sell-off you would say, “Oh okay, well that is the end of that deal.” But when you really look at the stock in the way that I just mentioned, this is just a blip on the screen. Now we are up here. Volume was not that great. But the stock is at a new closing high, relative to the recent congestion. I don’t care about all of this stuff.
What my target on this stock is about 15.50. I think the stock is going to push above the 50-day moving average or at least test it. But I am really looking for another 5 maybe 6 percent on this stock. That is all. All I am talking about here is a trade. I am not talking about some big wonderful monster reversal on Snapchat ( NYSE:SNAP ) to prove the bears wrong. I just think this is stretched, it got too stretched. Volume is generally towards the buy side here for the last week and a half, and I think that is going to continue. I wouldn’t commit a whole bunch of money to Snapchat ( NYSE:SNAP ), but I have committed some. Options are super expensive, which means that it is not a bad idea to buy the stock and sell a call against it, or sell puts down here. Either way, I think you are going to make money.
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