Here’s how we’re making money on Spotify (SPOT) (April 20, 2018)
SPOT
I want to go back to Spotify ( NYSE: SPOT ). I talked about Spotify ( NYSE: SPOT ) on Thursday and noted that I was looking to try to make some money on it but the stock never broke out; just never broke out; we talked about what to watch for. So guess what happened on Friday?
Let’s go to a 30-minute chart. When people say, “Oh, it’s an IPO; there’s not that much chart data.” Sure there is, it just has to be in a tighter time frame. Here, with Spotify ( NYSE: SPOT ) you can really see these squeezes. A volatility squeeze here back on the 13th, lead to a downward move. Hence, not all volatility squeezes are going to entitle you to make money on the upside.
Then we got this other one here on the 19th when we did not get follow through from the 18th. Really, if you look at it this 156.00, that was the trigger where you should have bought but it never got hit; never got hit here. Never even got hit here on the 19th. But because time marches on you look at this and say, “Okay this was 156.00. But then at the end of the day on Wednesday, the stock could only get to 155.00. It never really hit that on the 19th so I don’t think I am going to wait until 156.00. If the stock gets back to 155.00, that would be my new entry.” It is just like when new information comes in consider changing your plan. So after this 156.00 is the new resistance. And after this and a pullback 155.00 is the new resistance.
This is a high profile stock; a lot of people are watching it, which is why it traded the way that it did, finally, today on Friday. The stock breaks out of 155.00, on volume, a lot of gyrations here. I am sure we could break this down into more than a 15-minute chart or whatever. In fact, we will do just that. We have got a big gyration here, a big, big volume spike and then the stock just continued higher. And so the obvious entry point here today, on Friday the 20th, was 155.00. You didn’t have to wait for 156.00.
Now you are still good if you bought it at 156.00, you are still up pretty nicely. But the moral of the story is, you can use the prior day’s intraday high. If you are looking for a momentum trade like this, this is the entry that you take on these shorter-term charts, these IPOs. So if you are long Spotify ( NYSE: SPOT ) and I am, you have got to give this thing a little bit of room, I would keep it below today’s intraday low. Keep the stop below 151.23; keep it right about there. If the stock falls back below this then go ahead and sell it. By the way, if it falls back and then starts rebounding again, shoot, maybe you buy some more.
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