Scott thinks $UPST could give us a potential bounce trade tomorrow – May 9, 2022


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This is Scott with your Chart of the Day. There aren’t many good-looking charts in this market and even the one I am going to show you is ugly. But I think that Upstart ( NASDAQ: UPST ) could give us a potential short-term bounce trade into tomorrow. So that is one of the stocks that I have on my watch list and one of the stocks I will be talking to members about at I will give you a little insight into what I am thinking with this chart.

As you can see, Upstart ( NASDAQ: UPST ) has been in a very strong downtrend since November. It basically peaked when the rest of the market peaked. And a lot of people are saying that Upstart ( NASDAQ: UPST ) breaking down was a clear signal of a market that is overinflated and needs a rest. This has rested, it has rested a lot. From the high back here in October to the close of today the stock is down about 80 percent, that’s a lot for any stock, especially in a market like this.

If I turn on After Hours you can see (I actually have to zoom out), that the stock is down another 47 percent here today after hours due to earnings. So first off, I want you to know one really important thing about trading, it can ALWAYS go lower, even if the stock is down a lot. And you think, okay, I know this is the bottom, it can always go lower. And I also say, never say never in the stock market because I have seen a lot of crazy stuff in my years in the market and so I know anything is possible, both to the upside and to the downside.

I think we should watch Upstart ( NASDAQ: UPST ) tomorrow. I have the Bollinger Bands on this chart, that’s these gray lines right here and right here. And typically what Bollinger Bands do is, contain price action. So a large percentage of a stock’s move will usually be contained within 2 standard deviations of the middle Bollinger Band. And so anything outside of the middle Bollinger Band is typically kind of an abnormal move, it shouldn’t happen.

And so because I have the Bollinger Bands on here you can really see, that when the price gets outside it comes back in. The price gets outside, it comes back in. The price gets outside, it comes back in. And so here we are again, after hours, I don’t know about the earnings report. I didn’t listen to the call, I don’t know what’s going on but it is down a lot and it is WAY outside the Bollinger Bands.

One of the things that Dan Fitzpatrick taught me over at was, that one thing to look out for is extreme extensions outside the Bollinger Bands because price likes to come back in. And so I am going to keep an eye open for a potential rebound trade here on Upstart ( NASDAQ: UPST ) tomorrow. It may happen first thing, it may not happen at all, but it is one of the setups that I am watching in this market going into tomorrow.

We will want to see the stock establish a low, I don’t know where it is going to open, but we will want to see it establish a low. You will want to define your risk versus that low, and then scale out into any strength to the upside. That is one setup I will be watching into tomorrow.

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