Here’s your trade: Stay away – April 8, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to look at Trump Media & Technology ( NASDAQ: DJT ).
You probably should know the backstory on this, it’s Truth Social’s whole deal. We get this big massive move up here. A lot of people, all of whom are retail traders, I doubt that any of them are institutions, are lathered up about this stock. They run it up here and then we get a consolidation. Then the stock gaps up, and does what it does here.
You’ll notice that other than this box right here, these are all solid boxes. And what this means is, that irrespective of whether the stock closes up or down on any given day, it is closing below where it opened. And when you see that type of situation it tells you, I mean, you don’t have to look at any other indicators, gang.
It tells you that there’s selling pressure on this stock. You don’t even need to see this pullback, which is pretty severe. But you can literally just look at the boxes here on these candlesticks, are they solid or are they open? When they’re open, of course, that means that the close is higher than the open.
And you can see a complete flip, a complete reversal of what was happening back here. Back here there’s buy, buy, buy, buy, buy all the way up for the most part. We had a couple of exceptions, though, but for the most part, the closing location value, that is where the close was, relative to the intraday high, was actually on the high side, like this, for example.
Then the dynamic starts changing here, which it should, it must. Stocks don’t just go up forever or go down forever, except maybe this one. When you see this kind of move, that’s massive, either short selling, which I seriously doubt, or it’s just massive retail buying. But then, what really kicks it off is this breakout here above this first high, right?
And so you’d think, okay, well this is a breakout, this is the time to buy. But that is exactly the wrong thing that happened. The stock gapped up here, it went from this low at this level here, up to here, and that’s where folks bought, at the open. So you get a close here right around $50.00ish, something like that.
And then it opens the very next day at $70.00, that’s a massive 40 percent move in a day, not even in a day, overnight. And then at that point, all the selling pressure is on. This is why I’m walking you through this. This is not a stock that you want to buy. I mentioned this before, if you want to vote, if you’re a Trump fan or a Trump hater, don’t put your money in the market one way or another, these are totally different things.
My sense is, that a lot of this buying pressure is just from MAGA folks, from Trump fans, people who really, really want to support Donald Trump for whatever reason. And that’s all well and good, I personally think what’s going on in our government is, well, we’ll just say, it’s not a good thing, but that’s for another day, another conversation off camera.
What I’m saying now is, this is a stock that is under the control of retail traders. You’re not going to see any institutions buying this stock unless it’s buying it to cover a short sale. This is all institutional trading. It’s the only way a stock runs up as high as it does and then falls back down. So for you to be saying, okay, well let’s draw some support lines and we’ll see where the best time to buy this stock is.
The best time to buy this stock is not anywhere close to now. You could say, well this is the low, so if the stock falls back to here, that’s when I’ll buy it. Or you could say, oh, but right here, this was the low, which means that now that it’s back there I’ll buy this stock tomorrow, meaning Tuesday. I’ll buy this stock tomorrow because we’re going to get a nice bounce. This is going to be a really, really nice trade.
Now, this is the thing, this very well could rebound tomorrow, but I don’t think that the rebound will amount to much. If it does, we’ve seen a similar thing on the S&P ( NYSEARCA: SPY ) on Friday, where we got this big gap and crap, a big selloff on high volume. And then the next day, it gaps up a little bit and then runs higher.
It retraced a lot of this move, but I think that that retracement has run its course. This is a heavy market right now, but similarly and in spades, Trump Media & Tech ( NASDAQ: DJT ) is a really heavy stock right now. Because you know that everybody who bought, in this box here, everybody who bought is a loser on the stock, and it can actually go a lot lower, like to here. So this stock has a lot of supply to chew through before it is going to run very far.
So I’m just telling you, this is my, “There’s no trade here” video, I’m pointing out this stock to you because, frankly, it could very easily, within the next week or two or three, fall below $20.00, and even lower than that. I don’t like to make predictions, but I do like to look at market dynamics. This is a stock that’s held by retail traders, and a lot of them are really panicky, and they’re going to be selling more.
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