Here’s your trade on Microstrategy ($MSTR) and the double-your-fun ETF $MSTX – October 30, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to look at MicroStrategy ( NASDAQ: MSTR ) here.
They reported earnings that are not particularly good. They’re basically blowing chunks on their enterprise software business. Frankly, anybody who follows this company knows this. In fact, Michael Saylor even said a while ago, that he’s mentioned it several times, he had to do something with his company because the enterprise software industry is essentially commoditized and they’re just not making money.
If you look at their earnings profile, the green line with hash marks is earnings, you can see it’s actually drifting lower. The reason the stock’s coming out of here is because of Bitcoin. They own like a quarter of a million Bitcoin, which is substantially more than I own, and I’m happy.
So Bitcoin is really the deal here with them. The company reports its earnings and boom, the stock trades lower. But here’s what happens, this goes down, and down, and down, and down. If you’re watching this thing after hours you’re kind of freaking out a little bit, but then ultimately the stock reverses and comes back up.
Now, it’s got some stasis right in between, I’d say 265.00 and 240.00, which is probably, though not guaranteed, probably where it will open up tomorrow morning. I don’t think you’re going to see, tomorrow, the kind of volatility that you see in this now because all the volatility is being rung out of the stock.
So if we just look at this on a line chart this is what you see. You just see the stock chopping up and down, right around, using the 8-day moving average as support here. And the 8-day EMA right now is at 234.45. So where’s the stock? Well, it’s at 236.00, 237.00. So far that 8-day EMA is holding.
And so to be selling this stock tomorrow because, oh my gosh, I was holding it, I thought they’d go up but it went down. First of all, you’re not really paid to think, you’re paid to watch your process. I think we’re good on this. We’ve got MSTX ( NASDAQ: MSTX ) here, which is now a 2X or a double long ETF leverage. This also had one heck of a move to the downside.
I like the way this is trading, it would have been nice if it had gone up to $70.00. But, for me, as long as it stays below 70.00 and above 40.00, I’m good because I’m short options on both of these. And so I’ll be happy just to keep this stock, ride it, and ride, it and ride it, for as long as it wants to stay here because the option premiums are awesome.
Anyway, with respect to MicroStrategy ( NASDAQ: MSTR ) tomorrow, just wait and see how it opens. But my sense is, you’re probably just going to see this thing drift around here for a while. Again, I think the volatility is done.
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