Here’s how you exit a high flier gracefully. Check this analysis of Rivian ($RIVN). – November 18, 2021RIVN
Rivian ( NASDAQ: RIVN ), this was a genius maker last week, even up into this week, what did it peak here, on Tuesday. A monster move, if you own Rivian ( NASDAQ: RIVN ) you’re a trading genius. The last couple of days, not so much, you’re down 30 percent in a couple of days.
But here’s a way that you can protect that stuff. The thing is, you are watching this stock on the way up. An intraday low here, higher low, higher low, higher low, higher low. And so this gives you a pretty good pattern, which means that with each passing day what you can do is, you can set a stop. On this first day you go, okay, I’m buying the stock tomorrow, or whatever. But if this thing falls below today’s intraday low, I’m out.
Then the next day, okay, it’s up, now if it falls below this day’s intraday low I’m out. And then here, if it falls below this day’s intraday low, I’m out. If it falls below this day’s intraday low, I’m out. Good lord, we’ve got nosebleed here but I’m sticking with it because this is a stock that is going to 200.00 just because it’s EV and people are, they are not redneck crazy, they are EV crazy.
Now, I am looking at this saying, alright, I’m in this stock, maybe I even bought it. But if this bad boy falls below 153.78, which is the low, I’m out of here. So you sell at 153.78 and that is from the prior day’s open. Or let’s say you bought right at the close or something, you’ve given back 10 percent. If you bought down here you’ve given back a fairly decent amount of your gains but it has still been a monster trade.
However, if you said, no, I believe in Rivian ( NASDAQ: RIVN ), I think this is going to be the next Tesla ( NASDAQ: TSLA ). I’ve never liked Musk anyway, I think he’s weird but I think Rivian ( NASDAQ: RIVN ), this is going to be the next Tesla ( NASDAQ: TSLA ), I’ll stay long.
Even though you are typically a swing trader that doesn’t hold things for more than a couple of weeks, magically you have a belief that Rivian ( NASDAQ: RIVN ) is going to dominate the automotive, the EV market, I don’t know, just because. Maybe they have a nice website, they do. So you decide to stay long, you have no idea that this is massively overvalued. And yes, it may be $1,000.00 stock where it would be more massively overvalued.
Here’s the thing, if something is absolutely ridiculously overvalued, what’s the difference between ridiculously overvalued and super-duper ridiculously overvalued? There is really no difference. So what you are trading here is the chart.
Well, here’s a simple way for you to also look at this. This is the volume-weighted average price, on the way up this stock was always trading at or above that. And then back here on the 17th, that’s just yesterday, the stock fell below and keeps falling, and keeps falling, and keeps falling.
And so this is a stock that you could have gotten out of gracefully. But instead, you’re holding it and now you’re hoping for a miracle. In the future don’t do that, use these lower intraday lows on ramping stocks as references for when the party is over. You won’t catch the top but you won’t ride this thing any further down than you need to.