Don’t give up on Dave, Inc ($DAVE) – February 21, 2025
Dan here at StockMarketMentor.com. I want to talk about Dave ( NASDAQ: DAVE ) today.
Here’s the thing, so many breakouts, this one failed. I was looking at some of these similar stocks. These are some that Scott McGregor, my partner in crime at Stock Market Mentor, and I were looking at the other day. Scott said, “Hey man, check out all these ARK ( NYSEARCA: ARKF ) things”. Similar to the IBD 50 ( NYSEARCA: FFTY ), the same thing.
We got some key breakouts and pretty good volume, but they’ve failed recently, basically all of them have. If we look at the SPY ( NYSEARCA: SPY ), I think, from what I understand, I could be wrong. I guess something is coming out of China. Where, hey man, did you like the last COVID? Well, we’ve got a brand new one for you from the bat lady.
Maybe there is some of that going on, but maybe this is just time for the S&P ( NYSEARCA: SPY ), time for the broader market to take a little rest here. I look at this stuff ( NASDAQ: QQQ ), this is the TGIF pattern, thank God it’s Friday, you never know where this would go. At least we’ll have the weekend to sort things out, notice the very, very high volume here. The same thing on the S&P ( NYSEARCA: SPY ), this is super high volume on these declines.
That gets me back to Dave ( NASDAQ: DAVE ), pretty high volume here too. The difference is this, this thing has been in a basing pattern. It had been in this basing pattern, a high base for just about 3 months after breaking out of another one. So you could really look at this, I think it’s a stretch to say, oh, this is a cup and handle. I don’t see that, I see a long base here, I guess you could say it’s a cup, I would call it a bowl.
Finally, we got a breakout here. This was a really, really long base, and then we got a breakout. Pretty high volume but not as high as on this day when the stock peaked. Fine, that was then, this is now. After this big move higher, note what has been happening to the stock, Yes, it’s been drifting sideways, but generally speaking, after this, it’s been on lower-than-average volume.
Then we got this big day here, what was this? A gap down and then stabilizing on low-volume. So we’ve got a lot of low-volume pullbacks to test this support, and then grinding right back up in super light volume. What that indicates is a lack of institutional selling. This is just a bunch of weak hands taking profits.
We finally got a move higher here. And then on the following day, right here, we get a really high volume move, twice average volume ( I’m just walking you through this) Then the stock rotates up a little bit more, and then finally, like so many of these breakouts, it falls back. What I like about this is, it’s been in a fairly orderly base here. This has been tradeable, it’s kind of a squeeze.
And so my suggestion is this, I’m on the sidelines for a lot of stuff, I don’t own Dave ( NASDAQ: DAVE ) right now, but I’m watching it. I’m watching it because it’s very close to the 50-day moving average. And when a stock is starting to get close to the 50-day moving average and the overall market is weak, it’s silly to say, oh well, it’s going to break below the 50-day moving average. No, that’s a silly thing, especially if it’s held the 50 in the past.
So this is what I would suggest doing, it’s what I’m going to be doing. I’m going to be watching this, and what I want to know is, if the stock pulls back a little bit more to test the 50, and it doesn’t have to be perfect. If it pulls back and settles in here a bit, just settles around here and it continues to form this base, you could even call it kind of a Darvas Box, this would be one box. And then when the stock breaks out, which it did, then we could say all right, this is the next box.
So what we’re looking for is whether this box will hold. Or whether the stock ultimately breaks down and that’s the end of the trend. I’m not pounding the table here and saying, buy Dave ( NASDAQ: DAVE ). It does have some pretty smokin’ fundamentals. The relative strength of the RS rating on IBD is 99. Irrespective of this, this goes back over a few months, however, they calculate, that it’s not like today, but it’s been outperforming 99 percent of all stocks.
There are a lot of good things to like here, the fundamentals are really strong, and their margins are off the charts. They’ve got triple-digit earnings growth. Their revenue growth is really, really solid too, so fundamentally, there’s a lot to like about this. Technically, I see this as a stock that really truly has some potential for big moves higher.
Just wait for it, it’s a weak market, and you’re not going to miss anything. This is not a great buying opportunity, it’s just some weakness in the market that just needs to sort itself out. So give our buddy Dave ( NASDAQ: DAVE ) a little chance to sort himself out here, and watch for a move off of the 50, where you can be setting a stop.
Wherever you’re buying, if you’re buying close to the 50, then you just set a stop just below that, wherever you’re buying. That way it’s a low-risk trade, you always want to be thinking about risk. How much am I risking on this trade? The first question is then, where do I put my stop? You know where you’re buying, and so where’s my stop?
Once you know where your stop is, subtract the stop from your entry price, and you know what your risk per share is, then just decide how much money you’re willing to lose to make the trade.
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