This $7 stock is trading like a $77 stock. Check out Digital Turbine ($APPS) (November 11, 2019)
APPS
I want to look at Digital Turbine ( NASDAQ: APPS ) today. The first thing that jumps out at me here is $7.33. Here’s why this is important, the best stocks aren’t for 7.33. They might be $73.33 or something, $107.00; $7.33 is not really where I want to be. But then you look at the pattern and you can see really kind of a textbook cup and handle.
The first requirement is an uptrend, there has to be something to consolidate. Second, a top here and then a pullback and then that pullback holds. Then a return to the top right here and in-between we get this little whoop-de-doo below the 50-day moving average. And then back above it, so the stock prints this cup pattern here. Then now it has pulled back and is starting to form the little handle here.
I would look at this stock, just from a pattern perspective, as being a buy on a move above $7.50 and then you have got this really nice completed cup and handle pattern. But here’s the thing, if we just zoom out and look at this thing, for crying out loud, a year ago it was under $2.00. If you look even further back to 2016 and it kind of sold for pennies.
The point is if we did a 1-for-10 stock split and pushed the decimal point over you would see a stock that is just a monster stock. And so I am kind of treating this stock as if it were a $77.00 stock. In other words, I am not letting the actual price of the stock get to me; because I feel like when I see this move, look at the volume, look at the increase in volume, here versus here, where it’s a lot of volume all the way back to here. Versus back here where there is basically no volume. So you will see this pretty substantial increase in volume as the stock moves higher. Well that, to me, is institutional activity, particularly this area here. From about August on this is a lot of activity, this is a lot of volume coming in.
Now, before you just think that big volume bars have to be institutional buying, you also have to understand that this high volume move when volatility is increased, and it kind of has here, that can oftentimes be the signs of institutional selling, distribution. So this isn’t just as cut and dried as you might think. It could kind of go either way, but that’s why I am saying, look at the pattern, look at the volume, look at the trend, see what’s happening. Look at the fundamentals, and the fundamentals are strong, look at the fundamentals and then come back and look at the chart and say, “Hey man, if this thing goes over 7.50 I’m in. If it goes up above $8.00 I’m adding to that position.” If it doesn’t do any of those things then don’t be long this stock; it’s kind of a binary thing.
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