Chart of the week: This trade really jumps out at you

TL;DR

Despite a lackluster IPO, Uber's stock has shown signs of a bullish trend, with indicators such as a five-way wedge pattern, Fibonacci retracements, and momentum divergence suggesting potential upside. Short-selling and a high number of borrowed shares indicate a favorable risk-reward ratio for traders.

Transcript

John Burford here with the chart of the week for Monday the 17th of June and today I'm covering uber and of course uber technologies has been in the news quite quite a bit because the IPO last month was very much considered a flop unlike a lot of tech IPOs it did not scream higher it actually fell from the issue price here we are at $45 started fal... Read More

Key Insights

• 💨 Uber's stock initially struggled after its IPO, but has since formed a bullish five-way wedge pattern, indicating the potential for further upward movement.
• 🎚️ Fibonacci retracements have provided support levels for the stock, suggesting a continued bullish trend.
• 🍰 The high number of borrowed shares suggests a significant short interest, creating the possibility of a short squeeze and further upside.
• 🍉 Short-term trends in the stock market can offer profitable trading opportunities, regardless of long-term outlooks.
• 😫 Traders should set stop-loss levels to manage risks and protect their positions.
• 🧑‍🏭 Stock market trends can be influenced by various factors, including investor sentiment, market conditions, and company-specific news.
• 🍉 Historical stock data over a short period may not provide conclusive evidence for long-term trends.

Questions & Answers

Q: Why did Uber's IPO perform poorly?

Uber's IPO did not meet expectations as the stock price fell instead of rising after the initial offering. This can be attributed to heavy short selling and doubts about the company's profitability.

Q: What is the significance of the five-way wedge pattern?

The five-way wedge pattern observed in Uber's stock chart is a bullish sign. It indicates a potential upward trend and suggests that the stock's near-term future might be positive.

Q: What do Fibonacci retracements reveal about Uber's stock?

The two Fibonacci retracements, each touching the 62% level, suggest that the stock has found support at these levels. This indicates a potential continuation of the bullish trend.

Q: How does the high number of borrowed shares impact Uber's stock?

The fact that 70% of Uber's outstanding shares are on loan suggests a high level of short interest. This can create a short squeeze, where upward pressure on the stock triggers buying by short sellers to cover their positions, potentially leading to a surge in stock price.

Summary & Key Takeaways

• Uber's IPO was considered a flop as the stock fell from its issue price, but it has since experienced a rally and formed a bullish five-way wedge pattern.

• The stock has seen two notable Fibonacci retracements, touching the 62% level, indicating potential support and bullish momentum.

• Short-selling has been prevalent, with 70% of outstanding shares on loan, suggesting the potential for a short squeeze and further upside for the stock.