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Chegg, Inc.
Short

CHGG - Dec 24 100SMA StrongWeak Bounce

By Ronin_trader
Updated
I was trying to expand the range of my pool and looked at fundamentally weak companies that somehow had seen price climb. CHGG was one which I had found.

  • Sector: Education
  • Both EPS and Revenue has seen a drastic drop for the past 7 quarters.
  • This drop in revenue is due to the free AI models which are able to produce similar to better results vs their paid services. I could not find a reason why their stock had risen since their 14 Nov earnings
  • Does it respect the H1 100SMA (Min 3Months): Yes
  • Is it a Hype Thematic (AI, Solar): AI is an inverse hype theme for this company since it is eroding it’s business.




  • 100SMA StrongWeak Bounce 🏀 (0.5R) v1.0
  • Trading risk at 0.5R as we are testing this strategy
  • This trade model is based on us riding the 100SMA trend waves of the strongest and weakest companies. It only executes well when greater force (RUT & SPX) is trending. Entries are at greater force key levels when it is consolidating. When greater force is taking off it is too late.
  • Entry
  • Within Stdev 100 zone
  • SL = ATR14 * 2 (Run full course no early exits)
  • Trailing stop (Previous Day Low or high)
  • Price launch off (D1)
  • D2 Closes
  • D3 Move SL to D2 Low
Trade closed manually
Closed manually to save some cost.

I wonder if the CHGG short trade for 100SMA StrongWeak Bounce was forced because I was trying to expand the range of the pool. Yes the company has weak fundamentals, but price action wise it was an uptrending 100SMA and shorting into it, is similar to shorting against the trend. My original strategy is a pull back continuation bet but what I tried to do with CHGG was bet on a new trend forming.

Also if price is uptrending when the fundamentals are obviously weak, logically there must be something we are not aware off and it might be best to stay away.
Chart Patterns
Ronin_trader

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