Christmas is approaching and, I don’t know about you, but I feel it’s arrived way too fast.
They say time flies when you’re either busy or having fun, and let me tell you, here at RagingBull we’ve been BOTH.
One of our major focuses of late has been to put together some of the best collaborations between some of the top market gurus in the industry, all with one focus in mind, which is to bring you the best actionable trade ideas possible.
One of those ideas has started to move and maybe near a breakout and, in just a few days, a long-time industry veteran is about to start joining in on my Total Alpha video series to share his ideas and strategies.
In this article, I am going to share all the details with you.
The legendary Mike Parks will be joining me soon
One of the collaborations we’ve been working on that I’m most excited about is between myself and Mike Parks, who is RagingBull’s Senior Training Specialist.
Mike is a veteran trader and educator, and his addition to my upcoming video sessions is going to add a level of insight that can only come from decades of experience in trading and market education.
Mike is incredibly knowledgeable on all things markets, and his talent for teaching new traders how to use market signals to choose the right options strategies is unmatched.
My Bullseye Trade of the week idea is on the move!
As far as my latest Bullseye Trade, Snowflake Inc. (SNOW), has been rallying since I alerted members to it.
According to Yahoo Finance, Snowflake Inc. provides a cloud-based data platform in the United States and internationally. The company’s platform offers Data Cloud, an ecosystem that enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. Its platform is used by various organizations of various sizes in a range of industries. The company was formerly known as Snowflake Computing, Inc. and changed its name to Snowflake Inc. in April 2019. Snowflake Inc. was incorporated in 2012 and is based in Bozeman, Montana.
We have seen so many other software stocks have a much rougher time than SNOW has been having of late.
Since this is a software stock, it really is one of those stocks that should have been taken out to the woodshed and shot, given the bloodbath that has occurred in many of these stocks in recent weeks.
So it can be said that, even though SNOW has been weak throughout much of December, it has been showing relative strength against many other competitors.
You can see a great example of this in Figure 1 below, where I show a 60-minute chart of SNOW in the top panel, and competitors such as UPST and SE in the bottom two panels.
Figure 1
Now, relative strength like this is usually a sign that large institutional players are gobbling up shares as the market is selling off.
Why would they be doing this? It’s because they’re buying into SNOW’s strong expected growth story.
Specifically, at a June 10 analyst day, Snowflake laid out a path to $10 billion in product revenue by fiscal 2029, which coincides with calendar 2028. The $10 billion revenue target would result in a compound annual growth rate of 44%.
To prove that institutions have been net buyers of SNOW shares recently, I present you with the following graphs and charts.
To start with, Figure 2, which is sourced from MarketBeat.com, shows the net inflows vs. outflows of institutional players over the past several quarters.
Figure 2
Next, Figure 3, also sourced from MarketBeat.com, shows an itemized list of the most recent institutional transactions, which, as you can see, lean heavily to the buy-side.
Figure 3
Finally, there are a couple of technical indicators that can be used to show the net accumulation of shares when prices are falling.
The one I’d like to show you here is the Accumulation/Distribution Line.
This line can be seen making a higher low as shares of SNOW were falling to new 3-week lows late last week.
Figure 4
While this indicator is not analyzing institutional volume exclusively, it is an indication that the “smart money” was gobbling up shares at a faster rate than retail traders were selling those shares late last week.
On Monday I said, “On the upside, I think SNOW could rally back into the $350s or higher before the end of the year.”
From a technical outlook, I noticed that buyers were stepping in near the $325 level, similar to early December where they made the prior pivot low.
And now that they have successfully pushed the price back into the 200 hourly moving average at $358.30, the next place they could run would be the pivot high near $375.
Figure 5
Now, I know this is a distant target for bulls but it’s not unlikely, especially if more buyers pile in when the 200 hourly moving average is broken to the upside.
The higher-risk “spicy” idea that I presented at the start of the week was to buy the SNOW Dec 31, 2021, 350 Call near $6.50.
So far, this option traded to as high as an asking price of $15.60 on Tuesday.
Figure 6
And, as of this Wednesday morning writing, this stock is trying to break above the 200-hour moving average.
To YOUR Success!
