CLA
Innoviz/CGRO Merger Play --> Will History Repeat Itself?!CGRO is expected to complete its merger with Innoviz (INVZ) technologies in the first quarter of 2021. If that timetable is to be believed then we are only looking at 1-4 month timeframe for the merger to occur. Innoviz is a lidar sensor play - think VLDR and LAZR . After analyzing VLDR/LAZR who are the well known tickers in this sector it looks like Innoviz could have a similar rally as the merger gets closer. Semi-recent news is that INVZ has partnered with Macnica (japan's largest distribution company) to sell its InnovizOne for the first time in Japan. InnovizOne has also been selected by BMW for its use in its fully autonomous electric car. Innoviz has some solid investors that interest me. They are backed by Softbank Ventures Asia and auto supplier Magna international. Magna international is one of the world's largest suppliers in the automotive industry and is the largest auto parts manufacturer in North America. So, seeing them invest millions into Innoviz is something to keep an eye on in the North American sector.
Chart :
What has drawn me to CGRO's chart is the 32% sell off over the past 44 days which may be finding a bottom at the $13 range. It held the Daily 50 SMA beautifully for 6 days straight which piqued my interest as well.
- HVN: there is a HVN between $13-14 and we saw a fail of this lvl on 1/25-1/29 but then we regained the $13 lvl which was key. The POC is at $13.78 which will serve as a strong resistance. If we can close over the POC then I am really bullish on the trade.
-Volume: there isn’t much special about the volume CGRO has seen the past 43 days as it has been mostly bearish with its sell off.
- Important to note the bullish price action this past week vs the declining volume, might be signaling another leg down unless $ steps in this week.
- 1/25 & 1/26 we saw 1.1 and 1.5 million volume with bearish candles both days. It looks to me like a failed bounce and subsequent gap down. Since these two days there has only been one larger volume day on 2/2 of 1.1 million.
We had some bulls come into CGRO that day and try to reclaim the daily 20 SMA but were unable to close above.
- MACD: CGRO’s MACD on Daily chart looks primed for a reversal, VLDR Daily chart also saw very similar MACD & RSI patterns before its merger rally
Merger :
- VLDR ran 148% the month leading up to its merger while LAZR hit 80% gains a few days before its merger and 150% gains the 4 days prior to its merger
- I am by no means saying this is going to happen to Innoviz. If anything this shows that the lidar market is becoming saturated with companies going public. LAZR by comparison has a market cap of 10.8 billion and VLDR of 3.92 billion.
The merger results in Innoviz with an estimated $1.4 billion equity value.
- I am looking at these comparisons and think there may be a possibility here for a INVZ run up into its merger. The tricky thing about this play is timing.
Plan:
I am currently in a small starter position of CGRO at $13.37 and this week I will be looking to continue to add shares. Once we get some momentum I am also looking to add some March or April calls.
1. If CGRO continues to see no bullish volume I think we retest the triangle bottom trend line and might even see the $11.60-12 range where the other HVN is located (lower blue square on chart). If this is the case I will watch for a bounce at this HVN and/or the 100 SMA.
2. I want to see CGRO hold its $13-$14 HVN range and close over the 20 SMA on the daily chart. With such a long consolidation and merger news imminent I am adding a starter position and then waiting on volume accumulation to add a larger position.
SL: If we fail the triangle pattern and look to be heading to the 11.60-12 range then that is a good opportunity to take the loss and re-enter lower. I have a smaller position so I am comfortable holding my shares through this breakdown if it occurs. I will more than likely avg down if these levels are seen.
***Downside: - Other Lidar plays that have SPAC’s supposedly merging in the first quarter are Ouster ( CLA ) and Aeva ( IPV ). The Lidar market will quickly have multiple companies joining via SPAC’s in the first half of 2021. This saturation can make it tricky for just one company to run. This writeup focuses on INVZ but a diversification of 2 or more of these Lidar plays may be more risk averse.
Thanks for reading my write-up if you made it this far! would love to hear your thoughts on this play/sector. Give me a like and follow on TV for future trade ideas.
CLA Long to 15.29, Golden mean reversalKeeping an eye on CLA for a reversal above the yellow 1W trend, and support above our weekly resistance at 13.50
Last months open at 13.85 is currently our resistance, and again around 14.20
If you fall under either the weekly resistance or the green support line, id be bearish until we recovered.
Depending on the trade, id consider 12.53 a good stop loss, leaving it just under historical support.
If you wanted to tighten it up, i think 12.99 should be a safe on the 4HR as well for a short term confirmation.
30m chart looks like a nice bull flag consolidation , the 200 MA is under the 50 MA, bullish confluence on the RSI.
if we can hold up these key levels, id expect to see a reversal in the near future to 15.29
CLA 50% fib, make or break on supportIn an ideal world, it'll bounce off the 18.5c support and trackback upwards, especially considering how low the RSI is. If it breaks that support line it'll most likely track downwards to fill that huge gap we have. Either way, it is healthy for this to happen to move upwards again.
