Is $TOST ready to pop? – April 9, 2024
This is Scott at StockMarketMentor.com and your Chart of the Day. I want to take a look at Toast ( NYSE: TOST ).
Let’s zoom out and get the story of this stock. You can see, Toast ( NYSE: TOST ) IPOd back here in October of 2021. Ugh, that was a bad time to IPO, and clearly, that’s when the market started to break down. If I bring in SPY ( NYSEARCA: SPY ) you know that in October of 2021, right around this topping period where we ran up and then broke down.
And so Toast ( NYSE: TOST ) didn’t get a fair shot, in my opinion, because it launched at a bad time of year. Then the FED started raising interest rates, and then everything tanked. And that is kryptonite for IPOs because they don’t have a lot of price discovery.
So we have the initial IPO move, a drop-down into price discovery, and now we are in what most people call the institutional due diligence phase. That’s the time of the IPO where it just chops around, and major funds and investors discover the company. They learn about the company and try to figure it out.
That can lead to a lot of sideways chop and slop, which it’s been doing for a couple of years now. If I zoom into more recent price action we can see it’s tested some recent highs from back here at around that 25.69 level.
You can see back here in 2023, it tried to get above and failed on earnings. It tried again here in mid-2023 but couldn’t get above. It dropped, had some successful earnings, and recently it’s building a bit of a handle here. You can zoom out and see this large cup pattern, and then if I delete this we can then see a bit of a handle pattern.
I see a bit of a cup, a bit of a handle, and I see earnings coming up here. And so while I think this is an interesting stock, it still hasn’t proven itself in terms of breaking out and changing the trend. What I would do on Toast ( NYSE: TOST ) is, keep an eye on it. I would definitely watch for it to break out of this consolidation pattern, which has acted as resistance here, here, here, here.
We have to expect there’s going to be a level of resistance until it can prove otherwise. So what I would do on Toast ( NYSE: TOST ) is, probably, delete all this stuff. Yes, it’s potentially building a cup and a handle, but I would take this line and just build an alert into my charting platform right around that 26.69 level, click “Create”, and let’s have it there for a month, maybe two, something like that.
Click “Create” and then I’ll be alerted if this breaks out to the upside and can actually make a new high. Now, they do have earnings coming up at the beginning of May, so maybe this can tighten up and give us some nice tight price action before a pop above and a potential trend change.
So while I don’t think Toast ( NYSE: TOST ) is ready to pop just yet, I certainly think the fact that it has chopped sideways in and around this range for a while, it definitely warrants watching. That’s what I’m going to do here with Toast ( NYSE: TOST ) and I wanted to share with you here tonight. I hope it’s helpful.
Free Chart