How To Buy Stocks On Weakness And Manage Trade Risk | IBD Live

TL;DR

Coinbase is experiencing an orderly pullback, still above a rising 50-day moving average. The stock is testing the upper end of its range, but further confirmation is needed for a potential trend reversal.

Transcript

[Applause] this is coinbase walk us through your thoughts on this talk is this one of those orderly pullbacks you're uh interested in I mean a big haircut uh percentage-wise here but it's still above a rising 50 day it is yeah and it's pretty remarkable that it is still above a rising 50 considering it's pulled back 26 in the past three or four wee... Read More

Key Insights

• 👾 Coinbase is currently experiencing an orderly pullback, which is typical for higher beta stocks in the riskier space of the market.
• 🛀 The volume pattern suggests that the stock has already experienced significant buying and profit-taking.
• ❤️‍🩹 The stock is testing the upper end of its range, which was prevalent in the first half of 2022 and 2023.
• 🪡 Further confirmation is needed to determine if this pullback is a true trend reversal.
• ✋ The position size and stop loss should be determined based on individual risk tolerance and portfolio allocation.
• 🎯 The target for the trade is around $15, which coincides with a breakout zone and where the stock's resistance may occur.
• ✋ The trading strategy involves taking some profit at current levels and potentially riding the trend for higher gains.

Questions & Answers

Q: What is the current price range for Coinbase stock?

Coinbase is currently trading around the $80 mark, but it is experiencing a pullback from previous highs.

Q: Is Coinbase still above its rising 50-day moving average?

Yes, despite the pullback, Coinbase is still above its rising 50-day moving average, which indicates some strength in the stock.

Q: How does the volume pattern of Coinbase suggest a potential trend reversal?

The volume pattern shows a significant increase in buying volume during the stock's run-up in June. Currently, the volume is lower than the recent average, suggesting a decline in selling pressure.

Q: What is the suggested position size and stop loss for Coinbase?

The suggested position size for Coinbase is around 6.5% of the total portfolio value. The stop loss is set at approximately 12% away from the entry price to give the stock room to fluctuate.

Summary & Key Takeaways

• Coinbase has pulled back by 26% in the past few weeks but is still above a rising 50-day moving average.

• The stock is currently testing the upper end of its range, around the $80 mark.

• While the pullback is steeper than usual, considering the previous run-up, more confirmation is required for a potential trend reversal.