WHY I'M STILL BEARISH
REASONS TO BE BULLISH
SUMMARY
Overall I would steer clear from this shipwreck. I had been expecting a bounce of late for Shopify but until this stock breaks the white dotted stick-model and betters it's recent volume, it's best to remain on the sidelines. I would say that shorting from here is high-risk, low-reward. There isn't enough history, with SHOP being listed well clear of the GFC to rely-upon it holding the purple channel. That said, still expecting a further 50% capitulation from these levels.
- Shopify still trading at 85x earnings - hugely overvalued
- Next support 50% away at $150
- Stick model (white dotted lines) yet to be crossed to the upside, with air below
- Approaching recent lows from May 13 of $306, lower highs not yet in
- RSI still showing weakness in red bear-zone and further sell side possible going into June
- Moving average still shows very much in bear market, and a lot of time must pass before it can reset and reclaim to be in a bull market
- Insufficient history of corrections and therefore bottom of channel unlikely to provide support
REASONS TO BE BULLISH
- Just had a 10% drawdown in a day and huge sales already
- Decent uplift in volume of late, although still expecting more in a capitulation event
- At bottom of exponential channel, typically in the buy-zone in market corrections
- Eventually a countermove will come, but that may not be forthcoming for another month or two
SUMMARY
Overall I would steer clear from this shipwreck. I had been expecting a bounce of late for Shopify but until this stock breaks the white dotted stick-model and betters it's recent volume, it's best to remain on the sidelines. I would say that shorting from here is high-risk, low-reward. There isn't enough history, with SHOP being listed well clear of the GFC to rely-upon it holding the purple channel. That said, still expecting a further 50% capitulation from these levels.
Broken above the white dotted trend lines for a bear market rally. Decent long entry with reasonable risk/reward for a few weeks