UBER Breakout Imminent
UBER is about to make a large movement.
I don’t usually operate on 1h candles, but with Uber we don’t have much history to look at. In the three weeks since its IPO, Uber has been surprisingly boring to watch. This is mostly due to the unfortunate timing of its launch. In the week of Uber’s IPO the market experienced its highest volatility since the Christmas massacre. We have yet to decide whether 2019’s party is over, but Uber will likely trade as an amplified version of market’s decision.
Uber has been forming a small flag since its debut, unsure of which direction it should breakout. Options expiring in two weeks currently hold a 5% premium in both directions, anticipating the coming move, but split on the direction it will take. Since before its launch I have felt that, should the market have another significant leg to its bull run, UBER could potentially be a significant bubble of 2019 in similar fashion to the cannabis industry in 2018 and cryptocurrency in 2017. Whenever enough attention is focused on the future, anticipation surpasses reality without fail. With markets this creates bubbles as the integral variable of time falls from calculations.
While there is a large upside to UBER at the moment, it will be entirely subject to prevailing market sentiment, which is currently a jittery mix of trepidation and ambition. It wants to go all in on one more hand, but it also knows that it’s drunk and should head on home to recover.
Relevant indicators:
1. As mentioned, we have a flag forming. Volume has been drying up as market players place their bets over the last few weeks, and when the dice roll soon, the price will either break above 45 or below 35, the current high and low created by the first two trading days.
2. Bloomberg recently reported that 70% of available shares for shorting are lent out. This high amount indicates a strong belief in the downside, but it also shows a saturation of the position that hasn’t yet managed to materialize, indicating that it may not be strong enough to dissuade investors who want in on UBER.
2. Uber is not a profitable company, which means any investments made currently will require a large amount of time to bring a return from the company itself. The only way to profit off of a company like this is if someone else is more excited about the investment than you. Netflix (NFLX) is an example of this. These companies are expanding rapidly, and all returns are reinvested immediately in a battle to grab future market share. Due to time being such an unknown variable for the return, there is a natural inclination to the downside caused by reality that can only be countered by an increasing amount of hype regarding the potential returns of the future. This factor is largely dependent on overall market sentiment, but high-profile companies like Uber are the ones that best achieve this.
1. Lyft had its IPO shortly before Uber, and with the stock’s premier going a way similar to Facebook’s initial launch, this seems a simple instinctive guess to the direction due to LYFT being the closest comparison on the surface. But Uber is not Lyft, and its image and scope can be argued to place it in a different class than Lyft, rendering the comparison flawed. If investments in the future of self-driving cars are going to operate similarly to that of media and entertainment like Netflix, then Uber is the obvious choice for an investment in this future.
Note: Bottom trend line may be entirely accurate due to such limited information. While This movement is expected imminently, there is no accurate way to determine the exact timing for this.
I don’t usually operate on 1h candles, but with Uber we don’t have much history to look at. In the three weeks since its IPO, Uber has been surprisingly boring to watch. This is mostly due to the unfortunate timing of its launch. In the week of Uber’s IPO the market experienced its highest volatility since the Christmas massacre. We have yet to decide whether 2019’s party is over, but Uber will likely trade as an amplified version of market’s decision.
Uber has been forming a small flag since its debut, unsure of which direction it should breakout. Options expiring in two weeks currently hold a 5% premium in both directions, anticipating the coming move, but split on the direction it will take. Since before its launch I have felt that, should the market have another significant leg to its bull run, UBER could potentially be a significant bubble of 2019 in similar fashion to the cannabis industry in 2018 and cryptocurrency in 2017. Whenever enough attention is focused on the future, anticipation surpasses reality without fail. With markets this creates bubbles as the integral variable of time falls from calculations.
While there is a large upside to UBER at the moment, it will be entirely subject to prevailing market sentiment, which is currently a jittery mix of trepidation and ambition. It wants to go all in on one more hand, but it also knows that it’s drunk and should head on home to recover.
Relevant indicators:
1. As mentioned, we have a flag forming. Volume has been drying up as market players place their bets over the last few weeks, and when the dice roll soon, the price will either break above 45 or below 35, the current high and low created by the first two trading days.
2. Bloomberg recently reported that 70% of available shares for shorting are lent out. This high amount indicates a strong belief in the downside, but it also shows a saturation of the position that hasn’t yet managed to materialize, indicating that it may not be strong enough to dissuade investors who want in on UBER.
2. Uber is not a profitable company, which means any investments made currently will require a large amount of time to bring a return from the company itself. The only way to profit off of a company like this is if someone else is more excited about the investment than you. Netflix (NFLX) is an example of this. These companies are expanding rapidly, and all returns are reinvested immediately in a battle to grab future market share. Due to time being such an unknown variable for the return, there is a natural inclination to the downside caused by reality that can only be countered by an increasing amount of hype regarding the potential returns of the future. This factor is largely dependent on overall market sentiment, but high-profile companies like Uber are the ones that best achieve this.
1. Lyft had its IPO shortly before Uber, and with the stock’s premier going a way similar to Facebook’s initial launch, this seems a simple instinctive guess to the direction due to LYFT being the closest comparison on the surface. But Uber is not Lyft, and its image and scope can be argued to place it in a different class than Lyft, rendering the comparison flawed. If investments in the future of self-driving cars are going to operate similarly to that of media and entertainment like Netflix, then Uber is the obvious choice for an investment in this future.
Note: Bottom trend line may be entirely accurate due to such limited information. While This movement is expected imminently, there is no accurate way to determine the exact timing for this.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.