Snap is still a short

December 20, 2017 01:38 PM

Snap Inc. (SNAP) has been a reliable short since its overpriced IPO in March (see “The Banana Republic of Snapchat,” MT April 2017). SNAP is a social media play down 49% since inception. Earnings momentum is about as weak as it can be, with its only three quarterly reports producing double digits sell-offs of 14.6%, 14.1% and 21.4%.

The stock is on a current four-week losing streak falling 24%. SNAP now sports a bear flag, which indicates a challenge to its all-time low just below $12. Traders should short SNAP on a sell stop below $12, which carries a measured move to $8.50.

About the Author

Doug Busch has been trading the U.S. equity markets for two decades using traditional technical analysis, as a trend follower, with an emphasis with Japanese candlesticks. @ChartSmarter