Thinking about buying $MPWR? Think again – February 10, 2022
MPWR TWLO
Monolithic Power Systems ( NASDAQ: MPWR ), After the close, the company reported 4th quarter earnings and guidance that was much better than the market was anticipating. It ran up a bit after hours but, in my view, not much to even talk about.
Here’s the thing, the issue with this stock is, it’s trending down. It is below both key moving averages. The 50-day moving average is dropping, a nice little ski slope and this thing is up in what they call a bearish wedge. Now, back to that in a moment.
If you look at Twilio ( NYSE: TWLO ), that company reported earnings, look what happened, the stock, wow, closed up 2 percent. The problem is, it opened up at about 11 percent, a little over 11 percent. So from the open, the stock actually closed down 10 percent.
The point is, it’s really simple, don’t buy down-trending stocks that pop, short them, it’s a better risk/reward; especially, if the stock pops right up to a down-trending moving average like the 50-day moving average.
Here ( NASDAQ: MPWR ) I would say, again, if the stock happens to, and I seriously doubt that it will, if the stock happens to run up here, that is when you short the stock with a stop just above 450.00.
On the other hand, if the stock falls out of this level here and starts to run down, that’s when you short the stock right about here with your stop right up there.
I look at these types of things, and I see infinitely shortable stocks. You just want to get them on the rebound because if you short them too late you are going to get killed in the snapback, it is just going to rip your face off.
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