Want to see a 4 Standard Deviation Trade setup? Here’s your trade setup on Snap ($SNAP) – October 22, 2021

by DAN SNAP 
I want to look at Snap ( NYSE: SNAP ) here, or as I call it “Snaptwit”, probably because only twits use Snap ( NYSE: SNAP ), I don’t know, but that is what I call it.

You know the company, shall we just say, had some dismal news on Thursday and that lead to this big massive implosion on Friday, just this morning it gapped down 20 percent. I know on Thursday night it was down even lower than that. It looked, actually, like it was kind of setting up to be a pretty good trade to the long side.

Typically, you see a stock that gaps down as much as this did, you flush out all the suckers first thing in the morning, that are selling, in a panic. They have got to get out before everybody else sells, and of course, they are all rushing to the exits at the same time, which means there is only “up” to go for the stock.

This looked like it could be a heck of a snapback. I actually bought just a little of it and kept a real tight stop and then within 10-minutes my stop was hit. I know that because I heard the ding in my software. The bottom line is, then the stock traded sideways, we’ve got a 1-minute chart here, and it traded kind of sideways to “down”.

So now, let’s take a look at things that matter here. This is the way this went, standard deviation, Bollinger Bands; 2 standard deviations, these are supposed to contain, like 90 percent of all closing prices, this is closing prices. If they go to 3 standard deviations, which I am going to show you here. Basically, it’s against the law for the stock to close outside 3 standard deviations, yet here we are. The stock closed outside 3 standard deviations.

But wait, there’s more. Let’s go to 4 standard deviations. Now, 4 standard deviations down, the bottom band here is 55.03, the closing price is 55.09. So basically, what I am saying is, at 4 standard deviations below the 20-day moving average, this is actually a capital offense. This isn’t a misdemeanor, it’s not even a felony, this is a capital offense where the stock is down this much. And so I am giving you the setup for Monday, and I am giving it to you right now.

This stock desperately needs to bounce, but you can’t anticipate it bouncing, you can only watch for it to bounce. So here’s the deal, the low of the day was $55.00, it closed up only slightly. So the low of the day was $55.00, there are 2 ways that this could go and I am going to give them both to you. If the stock trades below $55.00 on Monday don’t buy it. Stay the heck away from it. Stay away from the stock if it trades below $55.00.

However, if the stock starts to trade back above $55.00, that’s when you buy it. And where would your stop be? Just a little bit below $55.00, give it literally like $.50 or $.60. But this $55.00 mark is the line of demarcation between buy, don’t buy. If it gets back above here, you buy it. If it doesn’t get back above there, then guess what? The sellers are not done selling, don’t try to get them to hurry up, just step back and wait. So that’s your trade for Monday morning.

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