4/3/2018 Market recovery and time to buy BABA? No tweets from “TweetMan” = up we go! Spotify DPO.

Fun Fact #18

Did you know that Spotify had a direct public offering today? A direct public offering (DPO) has an advantage of not paying the huge upfront costs of an Initial Public Offering (IPO). This is why some smaller companies favor DPOs. 

In DPOs, “the business sells shares directly to the public without the help of any intermediaries. It does not involve any underwriters or other intermediaries, there are no new shares issued, and there is no lock-up period” (Investopedia). 

You can read more about the differences between IPOs and DPOs below:

https://www.investopedia.com/news/what-difference-between-ipo-and-direct-listing/

In the CNBC video I watched this morning, they discussed that Spotify generally trades in the $99-$130 range (as a private company), but the DPO today had Spotify opening at $165.9. Spotify closed the day down significantly from the opening price.

Here’s an intra-day chart of Spotify, with ticker symbol cleverly named “SPOT.”

SPOT image.PNG


 

4_3_2018 Market Stocks

BABA analysis 4_3_2018.PNG

BABA has dropped into the 165-175 support level which presents a good buying opportunity. The only concern is that it went down a substantial amount today although the indexes are up a lot. Although I don’t believe in the specific value of the moving averages, BABA is right at the 200 day SMA, as you can see in the red line above. Generally I’ve found that if BABA drops when the market goes up, it will tend to drop for another couple days and then recover. Perhaps you could be patient and wait for an even better price to buy at, like 168-170 for example. Remember to use a wide stop for BABA since this stock is very volatile. I like using twice the 14 day ATR for a guideline. This would be about 13.5 dollars below the current price. 

QQQ analysis 4_3_2018.PNG

QQQ is shown above. One thing I noticed immediately is how visually similar today’s candle was relative to the candle on February 9th. I’ve highlighted those candles with a circle in the above chart. If the current price holds, we have successfully made a higher low, which would signal that the bulls are still in control.

I’m still a bit nervous about “TweetMan.” TweetMan is my nickname for Donald Trump. Since he calls other people nicknames, like Kim Jung Un “Rocket Man,” I figured he needed one too.

Lastly, I would also be concerned if QQQ closes the week below 160. 

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