Finding Phoenix: MDB
I’ve talked several times about these cloud computing companies — they’re big time stocks right now that I’ve been paying close attention to (and if you haven’t been, you definitely should).
For today, to elaborate on the strength of this industry, I’m going to talk about a recent trade in MDB. You’ll want to read on for this… because it booked me a profit of $1K in an hour.
So let’s talk about this trade in MDB…
I came across this specific cloud computing company while doing research for bullish stocks within the cloud computing space. Why? As I’ve emphasized, this is one of the hottest industries out there right now.
This industry group fits into my ‘Phoenix Flyers’ list of stocks I like to aggressively trade to the long side, particularly when the market is pushing higher, or, after a market pullback and I can start to see that they’re lifting off again.
MDB fit the bill because of its high fundamental ranking within Chaikin Analytics, and, because of the ‘Five Star Phoenix’ pattern.
What does that mean?
For the most part, it maintains a strong, Five Star trend. You can learn more about this technical patten in a class I taught last year, Ready, Aim Freedom. This is my favorite, trend-following, directional pattern.
How does this lead to Phoenix?
In the places where the trend falters and the Five Star pattern starts to break, the stock immediately comes back — like the Phoenix.
If you look at this chart on a daily time frame, you’ll see that during the December correction, it didn’t even kiss it’s 200 simple moving average. It also rallied immediately after December 24th, 2018.
MDB – Daily Chart
This is a Five Star Phoenix, as proven by the nice trend, and how it rises after the falls.
This is where the Phoenix part comes in. Of course you can see that MDB is strong on its own daily chart. But, the gold comes in when you compare it to other stocks within its industry group, to see the strength in the trend — particularly compared to its peers. (I’ve attached my chart where you can see the side-by-side comparison below.)
Cloud Kings – Daily Chart
On this grid, you can see a comparison between MDB and its competitors. By using Phoenix, you can see how the strength has held up.
The 2x Move
Many of you may be familiar with the 2x move trade. This is a breakaway gap trade, after earnings. It’s a risky trade, and if you don’t pick the right stock, it can immediately go against you.
Why am I highlighting the 2x Move?
MDB is an example of a 2x trade that I placed — after doing all of the research, once it gapped up on earnings, I knew it was time to trade it.
By placing MDB in Phoenix within the cloud group, you can see very clearly that trades on this ticker are a solid bet.
When I see that analysis, I like to trade the earnings report to the long side. In this instance, I tried getting filled on some put credit spreads before the report, but the market makers wouldn’t give them to me. So, I waited for the after earnings play.
The market makers were pricing in a move of $10 on this stock for earnings. However, it gapped up after the report, more than $20. This was therefore a 2x move — and the kicker was that it had high short interest. See for yourself…
MDB – 2x Move
After the gap up on earnings, this was a solid after-earnings trade.
So, that’s why we bought long options first thing this morning in the trading room. (If you want to make sure to catch that next move with us, grab a $7 Options Gold trial here.)
This all happened because of Phoenix… all of this analysis and research was done prior with Phoenix, and when the move happened, I was ready to strike. You can see that clear execution when looking at my profits below.
Phoenix is all about comparing hand-selected stocks within similar industry groups. By seeing the relative strength in MDB, I was able to get a successful day trade out of this stock.
