Here’s your trade on Snap ($SNAP) (January 20, 2021)

by DAN SNAP 
Snapchat ( NYSE: SNAP ) or as I call it, “Snaptwit,” for whatever reason it’s not a complementary reason, frankly. I am basically canceling social media before social media cancels me, and I feel really good about that.

As I look at Snapchat ( NYSE: SNAP ) here, this stock has been in a sideways box for a while now, you can see that. So this is the price action, then boom, the stock makes another high, comes back, and maintains the low. So what we have here is a stock that is getting a little bit more action to the upside. That’s a good thing; it’s getting a little bit more action to the upside but there is still enough demand on the downside to hold the stock, right around $48.00-$49.00, something like that.

If you are looking to buy this stock the cons of that are, you have 2 days of distribution, where the second day was on heavy volume, so that’s a lot of selling pressure. That’s a negative, that’s why you shouldn’t be buying the stock. Now, on the other side, I could say the same thing, you have 2 days of decline, the second day, a big day of selling pressure, And since that time the stock is back up over 6 percent.

So this looks to me like it was essentially more of a shakeout than a sign of real weakness or, lookout below. So I look at this as potentially a positive; I look at this as a good day. At least enough to where I would look at this and say, you know what? I like the way this stock is trading. If I have been looking to buy a position in Snapchat ( NYSE: SNAP ) I think this is a pretty okay time to do it.

Even then, you still have a little more risk than you would like, you have about a 10 percent stop on the downside if you want to stop the stock out only if it falls down below the inside of the box here, only if you want to do that. Or you could just kind of start with a small position and trade it that way.

The bottom line is, the way this stock is trading I think it ultimately goes higher particularly with earnings on February 2. It is pretty easy to imagine this stock just starting an earnings run.

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