We're getting close to holiday trading time, so expect some volume drop off after expiration this week. A drop in volume could introduce a bit of volatility into individual names. It's something to consider if you're trading individual names, especially those in hot sectors.
Speaking of hot sectors, electric vehicles and special acquisition companies have been replaced with bitcoin names. I touched on core names like Marathon Patent Group ( MARA) with a bullish trade on Wednesday and Riot Blockchain ( RIOT) as two primary beneficiaries. Microstrategy ( MSTR) , and its large holding of bitcoin, should have been mentioned, as well. Now, we're seeing that chase expand into junk names and secondary names. Anything that might have anything to do with Bitcoin or crypto is finding significant buying. This shouldn't come to anyone as a huge surprise. That's been the trend for 2020. Hot money doesn't simply chase lightly. It is a four-alarm, all-hands-on-deck, woman and children don't get priority, buying stampede.
For some folks, this is reminiscent of the dot-com bubble; however, we didn't have this same level of liquidity during that time. We didn't have quite the same access to ease of trading, either. With the advent of zero commissions and the rise of trading platforms like Robinhood and Webull, we've witnessed the second-coming of the day trader and scalper. History hints that it won't last to this degree, but there's a stickiness to trading, whether you have success or not. For some, it's no different than a gambling addiction. For others, they find a career in it. And there will be plenty more who drift into the shadows, watching from afar, but nibbling now and then.
We have seen a change of character on the initial public offering side of the world, too, with ContextLogic ( WISH) stumbling hard out of the gate. Initially, the stock looked to open higher after pricing at $24. I saw indications in the $27 range, but the stock opened at $22.75, never hit $23.80, and hit $21 within the first hour. I don't expect this one to rollover. E-commerce has definitely found its share of buyers. I've made several buys this morning with an average just above $21.50, so I'm net red as I type.
I've rarely seen an underwriting syndicate let a perceived hot IPO like this one simply fail out of the gate. I would expect strong support in the $20 to $21 range as the underwriters do what they can to get this back above $22.50 to $22.75. That is the opening area, and what I see as resistance on the chart on Wednesday. If the stock breaks $20, then I'll stop out, but I like the risk-reward given the current market conditions. Still, I wouldn't get huge on the trade as the technical clues are scant, and I'm making a decision more on past observation and experience than something specific to this name.
I am keeping things a bit abbreviated, as we're getting a somewhat firsthand look at the Covid-19 battle with my pops. Fortunately, his stint in the emergency room was only an overnight affair and he's back home now. That said, I'm trying to focus more on some swing trades rather than intraday or overnight scalps.
