SQ3 trade ideas
SQ , Bitcoin Sympathy playSq found support at 214 Dec 31th. wish is where I would place my stop loss. Next target is 228 which is the top of the weekly channel (yellow line)
Bullish on SQ. Weekly pull back at stock RSIStoch RSI crossing 50 range and seeing some pull back on weekly but overall still bullish. Stim checks being deposited today and through Jan 21st. $2k stim still on the table. Aim to buy at $203.
SQ: In-depth analysis & a lesson on OBVHey guys, to begin this analysis I'll direct you to the OBV at the bottom of my chart:
OBV: What is it?
Cumulative index of plus or minus volume days based on change of closing prices. It is calculated as a cumulative total:
(x) If price close is higher than the previous day, add the day’s volume.
(x) If price close is lower than the previous day, deduct the day’s volume.
The level of the OBV is irrelevant, you are looking for divergences/convergences; i.e., you're looking for the OBV and the price action to move in the same direction to confirm the trend, if not the trend is in questions.
OBV: Timing the top was easy
When I first purchased SQ I was going to swing it, however after looking further into the company's financials and growth prospects I recognized opportunity and decided to hold my shares. I will be adding 10-15 shares below $208 or call options if the price trends up again (will make a separate post)
On the OBV you can see three arrows, the green arrow is a confirmation (convergence): OBV trends upwards and reaches a new high and so does the price action. The two red arrows also show two new ATH's for SQ, however the OBV failed to confirm new highs twice. If you're a swing trader the first red arrow is when you sell, (red volume bar confirms this). The second red arrow is the actual peak and this is when both the price action and the OBV trend line broke and began a new down trend.
OBV: When will the downtrend reverse?
Now that both the price action and the OBV are in a downtrend I connected the tops of the OBV to make a trend line. This is how I will know the trend is reversing and I'll know to buy call options or shares:
(1) OBV trend line must be broken (i.e., broken to the upside)
(2) Volume must confirm the trend, I'm looking for a long green volume bar
(3) My momentum indicator (LongShort Bimex) must begin trending upwards and pass the -30 to -35 level (on high volume)
*(4) On the 1hr chart I'm looking for a long green candle or some sort of bullish reversal candle (morning star, dragonfly, and bullish tweezers)
**NOTE: Step 4 is unique to SQ's chart, I find the 1hr works best and the 3 candle patterns are quite common over the last 3 months***
Hint: The chart currently looks really nice, if we see a some bullish price action and large volume tomorrow I think the trend will begin to reverse!
SQ: What the heck is going on?!?
Please, do not fret if you own shares. The sky is not falling. Here's a little lesson on funds and money management:
When a fund dedicates capital to different assets classes, equities, and securities (namely seen by ETF's) they tend to determine the weight of each security by using formulas that'll maximize the return (Er), minimize the risk (Beta and STD), and ultimately maximize the Share Ratio: let's call this optimal portfolio Q*. When a stock such as SQ with a high beta and STD shoots up 277% YTD it becomes overweight within portfolio Q* (% terms). As a result of this overweight security--although the fund is making superior returns--portfolio Q* is no longer optimal anymore because the Beta and the STD of the portfolio have also increased. As a result, funds and ETFs must shave their positions of SQ in order to return back to equilibrium. Some other factors at play:
(x) SQ is a risky growth stock; except waves on the chart
(x) SQ is included in a lot of ETFs; ETFs are very strict with maintaining optimal weights
(x) one word: ALPHA! How does a fund make money? By seeking alpha! It sells off a portion of its best prospect to both hedge its exposure and realize a gain. ~Funds flirt with the market by showing off their alpha~
Note: Notice the long red volume bars every x hours, this is a clue that big money (funds) are selling off blocks.
SQ: What next?
Now, we wait. We need to wait until we begin seeing volume in favour of the bulls (see above), if you're losing hope here is a list of reasons to be bullish:
(x) COVID has accelerated the shift toward digital commerce
(x) February 2020: approximately 5% of Square sellers in the U.S. were cashless. By August: that figure had more than doubled to 13%
(x) First half of 2020: Cash App revenue totaled $1.73 billion. Nearly 4x what it generated during the same period in 2019
(x) Square recently launched on-Demand Pay for employees and Instant Payments for employers, which will allow customers to more effectively manage their cash flow
(x) Electronic payment growth is shifting overseas, and Square’s business model looks portable into international markets,
(x) Square has allowed Cash App customers to buy and sell bitcoin for some time, but they now began investing into bitcoin ($50m purchase)
So, just my last point: I will be a buyer between $198-208, more likely below $204 however
Hope you guys enjoyed this! :) as always, leave me a like if you did and I'd love to hear some thoughts
SQ update2 black arrows show the demand/supply zone for SQ
If the black line is broken and below I'd buy puts right before close. If we're above the line I'd buy calls. Both trades have a 50% risk because this is a CRITICAL demand/supply zone so it can work either way
GLTA and happy holidays!!!
What to expect next?
- CRSP due diligence
- RIOT long-term price target
- ACB run-down
SQ Play The MoveMarkets seems to have rotated to the safer haven stocks today, such as FAANGs and blue chips. SQ, a consistent producer for the year, could be in a much needed pullback or retracement as a result. RSI trend has snapped but is still in bull zone.
Key support levels to watch are the 220, 214 and 200. Must have confirmation first, though. Purple box for ideal reversal area.
$SQ Wave #5 Long$SQ Update from my last week’s chart. Wave #2 Bounced of nicely from the 61.80% retracement. Wave #4 right on 38.20% retracement of Wave #3. Can be a really solid run up to Wave #5 if it bounces off the support right now.
SQ Rising Wedge - Bullish on old trend lineSQ
12/20/20 755pm pst
Rising Wedge- reversal incoming.
SQ will return to the strong upper trend from the March low point. It has only broken this Trend Line once. Allow SQ to run and come back. I see the entry at early January. SQ has no good/bad news, just a strong company. The stock will drop slowly at same cyclical slope.
One of the many stocks we're all wishing we bought and held, I'm sure.
Strong support at 200 RNNeed no further explanation. On rise from several months. In clear uptrend making regular higher highs and higher lows.
SQ Look to keep going up, but risk of a short-term pullback.Looking for a good buying opportunity in the near future.
#SQ $SQ Textbook shooting star formingLooks like a shooting star forming on daily candles, after what appears to be an ending 12345 diagonal. Seems like a fair time to be buying SQ puts. I grabbed Jan 15th 210s, if they profit tomorrow, I would probably close out, if the stock goes up, but does not break the top of the shooting star candle, I would add a little bit. Stop at the top of the shooting star. This is not financial advice, merely a punter's opinion.
SQ 1D Acending WedgeAcending Wedge, narrowing between trendlines.
Likely to breakout downside.
RSI divergence
MACD - no conformation yet, but might tip-off soon.
193-195: Potential target range in ~2 weeks.
Let me know what you think.
SQ updateNot really much of an update, but still going strong!
My EOY price target was $222 and I'm thinking we might see $228 now. Only issue I'm having is that the isn't volume picking up as seen on the OBV, a new ATH could be suspect with out it. I'll be keeping an eye out for a move up to $225 on a large volume spike, if not I think we'll play around 210-221 for the next little while
