Rivian has been under pressure for much of its life in the stock market. It IPO’d at the height of the growth-driven rally in November, reaching sky-high valuations and attaining a short-lived share price of over $125 dollars. Unfortunately, it was all down hill from there. The bear market of 2022 came fast and hard for the growthiest areas of the market — and Rivian fit perfectly into that category.
However, in 2023, a new meta seems to have arrived for the stock market — and it’s helping some of the hardest hit names of 2022 begin their catch-up trade. When momentum shifts like this, it’s important to hunt for decisive changes in the technicals of stocks you wish to trade. Things that signal a firm, unquestionable reversal, which could lead to a breakout.
Key #1: Pay attention to the options market. At Market Rebellion, we were all over this breakout in Rivian because of three words: Unusual Options Activity. Through monitoring the options market for highly unusual trades (in this case, a big purchase in far OTM call options, back to back), we were put on high alert for a potentially big move in this stock.
Key #2: Keep an eye on the most basic technicals. You don’t have to be a CMT to get an idea of what’s going on with a particular stock. In fact, sometimes it’s better if you only focus on the simplest indicators and charting tactics — the things that everyone knows about. In this case, we noticed a glaring change in Rivian’s chart: It’s first ever cross above the 200-Day Simple Moving Average. When a stock crosses above it’s 200-Day SMA — especially after spending a long time below it — it can be a big sign that a reversal in trend has arrived. Adding to that point, this 200-Day SMA crossover just happened to take place at a key level of past support and resistance.
Key #3: Stay disciplined, and trust your gut. You’ll never know 100% if a trade idea is going to work out or not. So you need to come up with a plan that you can stick to every single time you make a trade. Maybe it’s, “If I witness UOA and a technical pattern that confirms the bias of the UOA, I’ll make the trade with no more than X% of my portfolio, and if the trade doubles, I’ll take my profit.” Maybe it’s something else entirely — the specifics aren’t the important part. What’s important is that you make a plan, and stick to a plan, to prevent emotions, fear, and greed from getting in the way of a consistent trading strategy. Consistency is the most important thing on your trading journey.
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