Another day, another stock split. Not that Shopify (SHOP) really needed to split, after falling from an all-time high of $1762.92 to its last price pre-split at $373.21. In the past few years, trading options prior to stock splits in momentum favorites such as Nvidia (NVDA), Tesla (TSLA), Apple (AAPL), and more provided excellent pre-split trading moves to the upside. However, this year, whilst trading the bear market, lackluster short-term moves prior to splits in Amazon (AMZN) and Google (GOOGL) have been under much discussion, but have left me feeling like maybe the pre-split trade is almost dead.
I tried making an effort with Amazon post-split, but that bullish trade, like most long trade efforts (unless they appeared in the context of a short squeeze) have failed. While Amazon put up about a week-long move higher that couldn’t be compared to the phenomenal moves made by NVDA, TSLA, and AAPL, it only took 5 days post-split to give back the entire move.
Google has been on my radar for a long trade pre-split, and I’ve mentioned attempting to trade it into $2500 in July. I still think it’s a decent idea, but if the market as a whole rolls back over here, Google will likely go with it.
Longs in this market have just been so few and far between that, it’s been very challenging to get too excited about anything to the upside.
Shopify made a decent effort, where it at least bounced off of the dead lows of the year and traded higher for 5 days, but I really can’t even equate that move to any type of pre-split excitement. It seems to me that this move occurred simply as the entire market short squeezed a bit off of the lows, and Shopify went with it.
Check out the lackluster bounce in the chart below:
Click on the image above to enlarge.
So, while traders and investors are regularly asking, “Is there an opportunity in Shopify with the split?,” most of them are assuming that opportunity comes via a bullish move. However, it’s my bet that the upside move is pretty much caput. Yes, SHOP will split today and yes, the media will be looking at it and traders will watch the momentum but that doesn’t mean it’ll go higher.
In fact, I’m betting on a nice downward trajectory in this stock. I know it seems crazy, seeing as it’s already fallen so far in such a short time, but the trend is the trend and I’m going to trade that trend until it ends.
I discuss this setup in further detail in the video below:
How to Trade Momentum Prior to Earnings, with @traderDanielle https://t.co/nvcJZgcb9l
Let’s analyze two tickers with a statistically high shot of trading lower prior to earnings — Roku and Shopify. I’ll show you how I use the Earnings HotZone to determine pre-earnings trades.
— Simpler Trading (@simplertrading) June 27, 2022
But, that’s not all. I also cover Roku as well. This stock rallied hard last week, but in great news, it rallied directly into my key, overhead area of resistance that I wanted to use to get short. I’ll be discussing these trades and more during my Stacked Profits Mastery live session today at 11:30 am CT! We’ll be setting up my watchlist full of greatest hits going into earnings, covering some potential long-term stock buys that are going out in my Behind the Scenes – Your Inside Scoop reports, and more. Check it out by clicking here!