SNAP Long - Wyckoff Accumulation with Target around $32
After a precipitous drop from the IPO highs set in March 2017,
SNAP
shows signs of intelligent accumulation between $12 and $17, starting in July/August 2017. A selling climax, automatic rally, and secondary test completed Phase A. The secondary test was successful, as it made a higher low relative to the selling climax on lower volume . The following rally was not met with supply until after price created an upthrust above the automatic rally high around $17. Price revisited the bottom of the accumulation range relatively quickly, with a large volume spike on November 8, 2017. Despite the extra effort, it was unable to make a new low. A dynamic rally ensued, showing expanding volume and widening spreads, bring the price above the automatic rally high and into the area of the previous upthrust in Phase B. The next and final decline had relatively smaller spreads and low volume , indicating a controlled reaction into the final testing area. Phase C ended after a low-volume higher low was established, followed by a dynamic gap-n-go Sign of Strength Rally on big volume . The last two weeks began the Backing Up Action to test for more supply, prior to a significant mark up. Expect a smaller range between $16/17 and $21 as Phase D plays out. Unless significant supply emerges and manages to push the price deeply into the trading range, this smaller range should resolve into a strong Phase E mark up.
Horizontal Point & Figure analysis from Phase C to Phase A hints at a target around $32. The target can be extended following the completion of the backing up action, once the mark up commences.
SNAP
shows signs of intelligent accumulation between $12 and $17, starting in July/August 2017. A selling climax, automatic rally, and secondary test completed Phase A. The secondary test was successful, as it made a higher low relative to the selling climax on lower volume . The following rally was not met with supply until after price created an upthrust above the automatic rally high around $17. Price revisited the bottom of the accumulation range relatively quickly, with a large volume spike on November 8, 2017. Despite the extra effort, it was unable to make a new low. A dynamic rally ensued, showing expanding volume and widening spreads, bring the price above the automatic rally high and into the area of the previous upthrust in Phase B. The next and final decline had relatively smaller spreads and low volume , indicating a controlled reaction into the final testing area. Phase C ended after a low-volume higher low was established, followed by a dynamic gap-n-go Sign of Strength Rally on big volume . The last two weeks began the Backing Up Action to test for more supply, prior to a significant mark up. Expect a smaller range between $16/17 and $21 as Phase D plays out. Unless significant supply emerges and manages to push the price deeply into the trading range, this smaller range should resolve into a strong Phase E mark up. Horizontal Point & Figure analysis from Phase C to Phase A hints at a target around $32. The target can be extended following the completion of the backing up action, once the mark up commences.
Komen:
We have now seen SNAP pull into the 16/17 range, as expected. Supply appears to be relatively light, and SNAP is outperforming the S&P, which looks to be on track to test the lows of early February's selloff. The strong price action today suggests a good spot to initiate a 1/4 position, with a wide stop below the Last Point of Support established in early February. From here, we want to confirm that no major supply will emerge, and the Backing Up Action could last a few weeks. It will be important to evaluate the character of the upcoming rallies and reactions as part of the Backing Up Action, and we will be on the lookout for good places to build the rest of our position prior to the Phase E mark up.
Komen:
Over the last 2 weeks, SNAP receded back to just under 16 after a rally to ~18.5. Volume picked up slightly on the second half of the decline, and the stock is in a potential spring position after rallying back above the low of Feb 27. The Backing Up Action continues to unfold within reasonable expectations, and this most recent decline indicates there is still more supply that must be absorbed prior to a potential markup. A decent rally followed by a low volume test of the 16 level will be constructive, and may be a good spot to open or add to a position.