Here’s you trade on docuSign ($DOCU). Hint: It’s not tomorrow’s trade. (September 03, 2020)


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I want to just look at DocuSign ( NASDAQ: DOCU ). The company reported earnings and from what I saw it seemed like earnings were actually good. They exceeded expectations, though not like to absolute blowout numbers like we saw in Zoom ( NASDAQ: ZM ) a couple of days ago.

They were pretty good numbers but after the kind of move that this thing has had over the last year this is a stock that the earnings weren’t good enough to push this stock even higher. And instead, it became a sell the news. In other words buy the anticipation, sell the event. And so you can look at this now and say, “Oh, okay, well I want to buy this stock. This is a great opportunity.”

I would say this, I would say hold off on that and this is why: Because you look at where the stock was back here and then you look at where the stock has been over the last 3 days, right? And then you have to look and say, all right, every single share that was sold here was bought by somebody and they are really in pain, recent pain.

Look at the volume here this is huge volume. So you got all of these buyers that are kind of trapped now and they are not happy; because it’s like yesterday, today, the day before, and then they didn’t sell. So you have got a lot of people that are underwater, which means if the stock does find some demand here you are probably going to have plenty of supply just happy to bang that bid and be selling into this.

Also, what is the next catalyst? What is the reason for buying the stock right here right now? Earnings have been released and the market has spoken. It’s not like the company is going to come out and restate their earnings and say oh gosh, we screwed up. We actually made 1.2 trillion as opposed to 1.2 billion or whatever it is. So you have got to be aware of where you are in the news cycle and right now the news cycle is over on this. So let this stock settle out; I don’t think it’s done going up but I think it’s done going up for a while.

So watch this stock, put it on your watch list and then ultimately what you want to see is at some point the stock is going to test this 50-day moving average and that’s when you want to look and see what it does there; because it could go there or it could continue to fall there. The first one would be known as a good thing. This would be known as a bad thing. And then even if the stock comes up here and then fails, that’s when you are shorting it even. But right now, this is a stock that had a nice pop, an understandable drop, and now we are just waiting for the next train.

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