Tech stocks are taking charge as we kick off the fourth quarter, and I think it’s time to press the gas and prepare for a year-end rally.
When I review our portfolio of open positions I think we have a good mix, and I particularly like how overweight tech we are.
In fact, I think our most promising positions right now are the speculative tech names that we piled into over the past few weeks. I’m talking about Peloton, Robinhood, Snow, and ARKK.
HOOD and SNOW are the only ones working for us so far, but I think this is about to change.
Let’s take a look at the price action in ARKK and discuss why.
When we got long this one, it was coiling in a pennant just above some key VWAPs.
Last week, ARKK appeared to resolve this coil to the downside as it tumbled to new multi-week lows.
But what has happened since is inconsistent with a pattern resolution… or more specifically, a pattern failure.
There has been no follow-through at all. ARKK is still in the same place it was when it broke down last week.
So, maybe this wasn’t a resolution. I think it was just a false fail. This kind of thing happens all the time just before we get the actual move.
Think of a false fail as a little shakeout before the real breakout.
This was the case with PYPL just before it became a huge winner for us.
Remember this failed flag? It was only a shakeout. Notice how quickly price reacted higher afterwards. That’s what follow-through should look like.
It was also the case with GE back in August:
This wasn’t a downside resolution. GE immediately recovered and was back at the upper bounds of the range a couple of weeks later. It eventually went on to resolve higher.
The bottom line is that both GE and PYPL were great trades for us. But before they were multi-baggers, they looked like they might be zeros.
If you feel that way about ARKK right now, just think back to how it felt holding GE and PYPL through their false fails.
We don’t want to stop ourselves out of ARKK just before a big move.
I actually bought more today. This is on top of the double-sized position I put on to start. Now my ARKK is about 3x my standard position size.
I’m happy to do this with an ETF when betting on a broad theme like we’re doing with speculative tech right now.
We think the whole group is going to work, but what if we pick the wrong one? We are insulated from stock-specific risk when we buy the whole basket like this.
Breakout Multiplier is about letting them dance and holding on for the big hits. I think ARKK is about to deliver one for us.
If we’re above 46.50, I’m looking for a breakout. I have a feeling last week was nothing more than a shakeout.
I’m loaded up on calls and ready for it. Are you?
If you are interested in getting these trades you need CLICK HEREto watch the replay of this Breakout Multiplier earnings strategy call we held today!
