Don’t do that – November 29, 2023
This is Dan Fitzpatrick with FITZ IN FIVE. Snowflake ( NYSE: SNOW ) reported earnings after the bell, as did other software companies, such as Nutanix ( NASDAQ: NTNX ), which is screaming. Synopsys ( NASDAQ: SNPS ), is also working well, ( NYSE: PSTG ), not so much, that’s different ( NASDAQ: NTNX ).
But I want to talk about this one ( NYSE: SNOW ) and here’s why. Because you may look at this and go, “It’s going to break out, it’s awesome, I’ve got to get this stock.” Look, it is up 9.5 percent today, you can’t buy it tomorrow morning, it’s against the rules, and I forbid you to. Even if the stock runs higher from here, you just can’t do it.
What you need to be thinking about is this, and there is not a whole lot to say about this other than what I am going to say. If you are buying the stock here, you don’t get credit as if you had bought it down here, or even today at the open or something. You don’t get credit for that.
So what you have to be doing is saying, “Okay, if I’m buying it right here, then how high is this box going to be that the price is going to be filling it?” Is it going to come up into here because I’m starting here? My starting line is $190.00. and so how far up can the stock go from here before all the fine folks who bought down here start looking at this and say, “Okay, do you know what? I’m up 20, I’m up 25 percent, I think I will go ahead and take those profits.”
How far up is the stock going to go before that starts happening and then starts bringing the stock back down? You really need to ask yourself, what is more likely? Is it more likely that this box up here is going to be filled and the stock is never going to come back down here? Or is it more likely that, first of all, we have no idea what is going to happen here?
But we have a pretty strong likelihood that this stock will pull back, to some degree, into this box and perhaps give us a lower entry. Or, and it is probably more likely, at some point, we’ll look at this and say, “Do you know what? This stock is so stinkin’ sloppy, I just don’t think there’s a trade here.” And frankly, it is still kind of still in the accumulation stage. You can’t really say that this is a base breakout, it is just right at the top of the base where we have selling in prior quarters.
All I am saying is this, don’t get all lathered up because some company reported earnings and the stock is up big. The time to really get excited about that is when you already own the stock. And then at that point, you’ll go ahead and take some profits.
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