Technical Analysis Tour de Force: Snapchat, Inc. (SNAP)
See how Elliott wave analysis anticipated SNAP’s 2017 crash based on a stock only 5 days old
by Nico Isaac
Updated: December 07, 2017
2017 has been a banner year for initial public offerings. As of
November 16, the U.S. saw 123 deals come to market versus 94 in the same
period last year. "We've had a pretty good run," confirmed one news
source. "It's been a very active fall for IPOs." (Nov. 16 CNBC)
One of the most memorable of the bunch-- Snapchat, Inc. In case you
missed the splashy, flashy headlines, here's a retrospective: On March
2, Snapchat made its debut on the New York Stock Exchange (ticker symbol
SNAP) in the largest tech IPO since Alibaba went public in 2014.
To kick things off, 26-year old Snapchat co-founder Evan Spiegel --
the youngest chief executive of any company listed on the Big Board and
youngest billionaire on earth-- rung the opening bell with his
supermodel fiancé in tow, epitomizing how twenty-something tech nerds
have officially become the new rock stars of modern culture.
After soaring 44% on its opening day, the IPO leveled off in the
mid-$20 per share range. And according to the mainstream experts, the
stock's barely-there past was too limited to see its future. Wrote one
March 9 Yahoo! Finance:
"In just a few short trading days, it's way too early to tell if Snap will be a successful investment or public company."
The IPO, however, had plans to show its hand-- a bearish one-- right
away. In the months after going public, the stock plunged 60% to see its
profits vanish as rapidly as a 10-second snap.
Now, let's go back to that original idea espoused by the mainstream
-- namely, that it was too early to tell if Snap would be a success
right after its debut.
See, on March 8 -- five trading days after Snapchat's March 2 IPO -- our master technician Jeffrey Kennedy posted a Trader's Classroom webisode
on the tech darling. In that lesson, Jeffrey showed how, with just a
few price bars, technical analysis in conjunction with Elliott waves,
could confidently set the bearish stage.
One of the biggest clues of SNAP's weakness was the presence of a
so-called acceleration gap, a technical chart development, which helped
confirm a bearish Elliott wave set-up on the market's price chart.
Go ahead and listen to Jeffrey outline the bearish road ahead with the following clip from his March 8 Trader's Classroom. Simply press play and enjoy!
The chart below shows exactly where the March 8 Trader's Classroom appears in SNAP's precipitous sell-off:
In Jeffrey's own words:
"Snapchat-- great idea, but be cautious of the price chart because again we can see we're working an impulsive decline. There's nothing corrective, nothing counter-trend as far as this move to the downside."
"So as far as being able to offer you not just a forecast, but a high-confidence forecast, in Snapchat, it's pretty cool that by applying the tools of technical analysis and the Elliott Wave Principle, we can [do so] with such little data."
THAT trader who can see high-confidence entries, get in and get out with
confidence — and sleep at night.
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