Now that Upstart ($UPST) has hit the $160 target, what’s next? – May 26, 2021
UPST
A few days ago I featured Upstart ( NASDAQ: UPST ), actually on Twitter. It turned out to make a lot of people happy. The stock was breaking out above this level, above this last little high, a week ago, Tuesday the 18th.
The idea was, that if the stock broke out here, the way I saw it, you look at the volume and it was just starting to pick up and if it broke through this resistance, boom, it just looked like it would move really well, the volume was pretty good. And so I had said it might not be that big of a gain here but I really thought that the stock could go to 160.00, so about 20 percent above the close. It was quite a bit more from where we entered but still we’ll just look at the close.
Three days later the stock actually hit it here on this last Monday, a few days ago, it hit it real briefly and then fell lower. So I am looking at this saying, okay, is the trade over? Well, actually no, THAT trade is over. I know a lot of people on Twitter that I got messages from as well as a lot of members who took profits here on the price target.
That’s great but just personally, I think it’s worked out better for me that if I have a profit target or a price target of 160.00 in this case, I am probably selling at 155.00. I will leave the scraps for somebody else. I just want the meat and potatoes; because if you are trying to top ticket with the sale most of the time you are going to wind up selling late and you are going to be chasing the stock on the way down.
Whereas, if you sell it early, and early depends on every chart. But if you are thinking I want to get out a little early, I want to sell into strength. The idea there is that you are able to get a fill because there are still people that are buying stock. One way that I assess and it is certainly true in pre-market trading but in all trading, one way that I assess whether the market is strong or not is, I will put a little bit out there at just slightly above where the current offer is. And if it gets snatched up right away then I know there is still demand for it. If it doesn’t then I will adjust that offer down to the current market offer and maybe even just a little bit below that and then see how that works.
You could say, well, if you looked at a tick chart or this or that you would be able to see the same thing. Hey, I am just working in generalities here, I am not doing neurosurgery I am just trying to get what I am looking for and move on and so this method is what works for me. But also, just in general, you have got to look at where the closing location value is, the CLV, relative to where the stock has traded for that day. And this is one of the reasons why I really liked the way the stock was trading. It had pulled back here but then on this day you had decent volume, not anything like it was the day before on this gap and crap here.
I liked the fact that the stock closed very high in its daily range, almost within $.60 of the all-time high. So that was a good positive close. It meant that there were buyers all the way through the day. And so the next day, it’s actually here, the next day it gapped down a bit but the buyers were still there. And so here, the market opened, essentially, right at the low. It went down a little bit, 4 percent, and then rocketed higher again, a very, very high close in that day.
The following day we got the same thing, profit taking first thing in the morning. But this time the stock rallied up but then closed I’d say about half way in the trading range, and that’s different here, that’s really different. So at this point, you just want to be looking at it. You don’t want to say, oh, this is it, this is the top. You just need to notice this kind of thing. I will let you have whatever takeaway you want but you just need to notice that something is changing. So the next day is just a little bit more critical, boom. And so the next day you see what happened. Again, it gapped down, third day in a row, the stock gapped down. It gapped down here, here, and now here, below the entire prior day’s range and that was a big deal.
That’s when you would look at this and say, okay, it looks like this might be failing. The stock closed there, it opened up here, which is below this low. Get it? When it does that you have to look at it and say, okay, well maybe the bloom has come off the rose here, this thing isn’t moving like I thought it would. But here’s what you do, you don’t predict this stuff because it is still in a strong uptrend, you just watch it. And THAT is when, and this was the genesis of my trade. That was the time when I would look at it and say, okay, I see this weakness but it’s starting to move up.
And so if it does keep running above 120.00, it kind of holds that level or even up here, that means that there are still real buyers in here. There are sellers too, there always are. But the volume characteristics, the price characteristics, tell you that there are still buyers there. And so the stock finally, even if it just closed here at 154.00, that’s enough. You have got to look at this prior resistance and say, alright, I’m done. But certainly, if it hits 160.00 that is an obvious selling point, and so we get the stock that is sold.
However, now it has formed this little base here, it’s a little flag pattern. And so this is what I would do, if you are still in this stock then hang onto it, there is no reason to sell it. And then what you will do is, you keep a stop right under yesterday’s intraday low. Now, if you want to take a position go ahead and take one too. There is just not that much of a pullback here so go ahead and take one, but this is a new trade, stop at the same place.
Your idea is, after this kind of pullback, you get a zig here, a little tiny zag here, you are looking for this kind of move. So we’ve really got 2 trades, one that just kind of ended and the other that just may be starting and it is all just a function of what your risk is.
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