Breaking down from distribution zone
Updated
The chart is trading below the both the 8 exponential moving average and 20 period simple on the daily, 4hr, 1hr. Uptick in bear volume as we rejected from the moving averages and broke support. Looking now to the share offering dump low for a possible bounce then for that to just set a lower high as this stock comes back down to reality that is fair value. The only real support established over these few months was down in the channel ~$70-$40. If long I'd look for an entry down there for a potential bounce play.
Today the new names were announced and was a sell the news event since everyone and their grandma knew about this for months now, which priced it in and no selling that news.
Some of my counter points to a bull thesis:
The squeeze will not happen, bc shorts have already covered. The float has changed hands over 40x now since January giving the shorts plenty of time and volatility to trade and cover. Short data shows this, volume shows this, logic shows this. From what I gather a lot of retail is just HODLing, which is never a good strategy...just look at stocks like ACB. So retail has acquired a very high dollar cost average since we traded up here for about a month now and breaking down. No more free money for retail as the last stimulus check hit. This company had decreasing sales year over year for awhile. There was a reason it was worth $4.00 per share. Even with ecommerce this will take a lot of work to turn around. Why? bc this isnt dog food. CHWY is an entirely different model and sector. Your pets need tangible food and tangible toys. Video games are digital and can be directly downloaded onto consoles. Less and less are being sold in physical form. It's a dying model for GME and they do not produce any goods. They are middle man retailer. Highest analyst price target is $30 outside of Jeffries, which has a conflict of interest since they get paid to sell at a higher price. Then you have the float increasing by 5% making it harder to make moves in the upwards direction. Also that's added selling pressure. I would say even $30 a share is more than generous for this company. Look for us to go and at the very least retest that price support channel from the last dump that I stated above.
Also note here on the 1hr a descending triangle (bearish pattern) bears pounding on the glass floor of support and bulls keep getting less and less ghusto off it. That breaks and first target is $116.90
Today the new names were announced and was a sell the news event since everyone and their grandma knew about this for months now, which priced it in and no selling that news.
Some of my counter points to a bull thesis:
The squeeze will not happen, bc shorts have already covered. The float has changed hands over 40x now since January giving the shorts plenty of time and volatility to trade and cover. Short data shows this, volume shows this, logic shows this. From what I gather a lot of retail is just HODLing, which is never a good strategy...just look at stocks like ACB. So retail has acquired a very high dollar cost average since we traded up here for about a month now and breaking down. No more free money for retail as the last stimulus check hit. This company had decreasing sales year over year for awhile. There was a reason it was worth $4.00 per share. Even with ecommerce this will take a lot of work to turn around. Why? bc this isnt dog food. CHWY is an entirely different model and sector. Your pets need tangible food and tangible toys. Video games are digital and can be directly downloaded onto consoles. Less and less are being sold in physical form. It's a dying model for GME and they do not produce any goods. They are middle man retailer. Highest analyst price target is $30 outside of Jeffries, which has a conflict of interest since they get paid to sell at a higher price. Then you have the float increasing by 5% making it harder to make moves in the upwards direction. Also that's added selling pressure. I would say even $30 a share is more than generous for this company. Look for us to go and at the very least retest that price support channel from the last dump that I stated above.
Also note here on the 1hr a descending triangle (bearish pattern) bears pounding on the glass floor of support and bulls keep getting less and less ghusto off it. That breaks and first target is $116.90
Note
Closed out about 1/3 of my longer term puts on this and grabbed a starter in calls today for a bounce here. Plan is to add on further weakness if this doesnt trade higher at the open Monday. The more aggressive the bears are the more aggressive I will get until the hourly bounces and we cool off these indicators. Then after the bounce will reshort the daily lower high it creates.
Note
I guess I should have been descriptive as to why. Not sure where my head was at. The hourly (ext off) is at an RSI reading where based off historical data usually gets a bounce which is noted in the chart above. Also right at the daily support trend lineSo shorter term I'm looking bull for the bounce, but ultimately I anticipate to reshort the high of the bounce unless bulls really come through
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