Here is the long and short of $MSTR…and Bitcoin
This is Dan Fitzpatrick here at StockMarketMentor.com. I want to go over MicroStrategy ( NASDAQ: MSTR ).
Now, Bitcoin is starting to have a really nice look to it. Here it is on trading view, you can see the price now is pushing back to 68,000. You look at the weekly chart and see a pretty decisive rebound here.
I’m not talking about Bitcoin, though you could say I am when I talk about MicroStrategy ( NASDAQ: MSTR ) because it’s basically a Bitcoin stock. Their Bitcoin business is a hell of a lot bigger than their enterprise software business.
I look at this stock, we put it on the list back here, on this day, when it started to break out. Some of these drawings are where I’m looking at how these Bollinger Bands are expanding, which is what they do when a stock is advancing, they move farther away from each other, and that’s what’s happening here.
When I see this, when I see this big massive volume day on Wednesday, and then today, we just closed a few minutes ago, we got slightly above average volume on a Friday, which is not typically the case unless there’s news.
I think this stock moves higher, I think these funds that are long Bitcoin and short MicroStrategy ( NASDAQ: MSTR ), I think they are probably run by dummies with really, really advanced degrees. Because, in my view, I guess I’m calling myself smarter than the dummies, I’m being a little bit flippant here, why don’t you just be long MicroStrategy ( NASDAQ: MSTR ) and Bitcoin?
If MicroStrategy ( NASDAQ: MSTR ) is levered to Bitcoin and you’re long Bitcoin, we’ve got MicroStrategy ( NASDAQ: MSTR ) up 10 percent today, was Bitcoin up 10 percent? No, we’ll have MicroStrategy ( NASDAQ: MSTR ) up 15 percent in a day. Is Bitcoin up 15 percent in a day? No, so in my view, that’s just the wrong trade.
Now, just to be candid, I could absolutely be wrong so I’m not pounding the table. I’m just saying, why cut yourself off at the knees when you don’t have to? Why wouldn’t you say, well, wait a minute, which is moving the most? Well, I think maybe I want to be long MicroStrategy ( NASDAQ: MSTR ) and be short Bitcoin, Maybe that’s better.
Oh yeah, but MicroStrategy ( NASDAQ: MSTR ) is overpriced, it’s overvalued. Okay Dude, how can you say that? What makes you think that MicroStrategy ( NASDAQ: MSTR ) is overvalued?
I would say that in the same way as I would say, what makes you think MicroStrategy ( NASDAQ: MSTR ) is undervalued? Are you the one, are you Billy Ray Valentine, who gets to set the price of pork bellies? No, you don’t. You have to look and say, what is market pricing this at? And that’s fair value.
So if you know how to read a flipping chart you would want to say, why do I want to be short a stock that is obviously going higher? That didn’t work out really well with GameStop ( NYSE: GME ). Now, you can say, well sure it did, those that shorted it up here made a boatload of money. Only a fool would think otherwise, though it was pretty hard to get a borrow up here because the shorts were still really, really high and they were scrambling because they’d been shorting down here.
The point is, I can see if you’re really arrogant, shorting something here because you think it’s going to continue on a downtrend but why would you still be short when it’s doing this? And by now you’re thinking, I’ve got to go back and reapply at 7-Eleven to get that night shift and make some of that coffee.
The same thing with AMC ( NYSE: AMC ). It didn’t work out and you can say, well ultimately I was proven right. So you shorted the stock at 3.50, the stock goes up to $12.00 and you’re still short? No, you’re not, because your broker would have margined you. They would have liquidated your position if you were down almost 250 percent in three days or two days.
So you have to look at the chart. The whole point of this is, would you rather be right or would you rather make money? In this case, I don’t think shorting MicroStrategy ( NASDAQ: MSTR ) and being long Bitcoin is a viable trading strategy.
But I will say it again and then I will leave you with this, I could absolutely be wrong on that, I could absolutely be wrong. I’ll just suggest to you, why don’t you look at the trade? Why don’t you look at the chart? Why don’t you look at your account and say, okay, I don’t do the hedging arbitrage BS thing, that’s not what I do.
Most hedge funds don’t do it well, but they do do it. They are always getting new money coming in for reasons that escape me. But you can look at the chart and say, do I want to be long or short? Maybe you don’t want to be either, but I think if you’re short on this, you are going to be long-term wrong and in short-term pain.
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