Originally published on October 23, 2019 by TraderStef at CrushTheStreet.
If you were one of the fortunate few that secured a position at the IPO price of $25 or May 2nd open at $46, you remain ahead of the game with a $97.90 close today. Unfortunately, odds are greater that retail-level investors chased a much higher price during the parabolic spike or near the all-time high of $239.71.
Here’s Why Some Investors Buy High and Sell Low… “In fact, the investor conundrum of buying too high may be as old as the agrarian tale of free milk and a cow… To quote the fictional Forrest Gump, stupid is as stupid does. The logic goes like this: If you do not get in on a hot stock – even if it is at the penthouse as opposed to the ground floor – you must be missing out. So you take your place in a line that snakes longer than a queue for an overhyped Black Friday door buster.” – Forbes
For a seasoned trader that utilized technical analysis, a falling buy volume pattern that began in July as the price climbed higher was a big red flag that an overbought condition was approaching. The bearish nail in the coffin was a Hanging Man candlestick at the $239.71 high within an Evening Doji Star pattern, and the last hurrah volume prints were lower than the initial parabolic run. Smart money that boarded the IPO train or secured an early position following the opening bell ran for the exits. As the price collapsed on even lower buy volume prints with a Descending Triangle developing and intermittent breaks below the 50 Exponential Moving Average, it would have been wise to exit on any price strength during two Dead Cat Bounce episodes that peaked around $170, rather than risking bag holder status. Keep your eyes on BYND for a potential rebound or further deterioration in price when insider-selling restrictions expire on Oct. 29, the day after earnings.
It is true that hindsight is 20/20, but part of the process in learning how to use technical analysis is by studying the price history of stocks and real-time charts. The process is no different from professional football teams that replay videos of previous game days, tweak their strategy, and perfect play executions in the future.
So where’s the beef?
When comparing BYND and the COW ETF on an identical time span — BYND at $239.71 in July with a close of $97.90 today is down 58% vs. COW at $49.38 in July with a close of $45.70 today being down 7% — you would have faired better by hanging onto a cow instead of pea protein.
The carnivore vs. vegetarian line of thought segues into an examination of fundamental factors for the price spike and plunge of BYND, aside from the obvious momo play.
Beyond Meat Is Beyond Unhealthy – Ancestral Nutrition, Mar. 2017
The hidden dangers of protein powders – Harvard Medical School, Sep. 2018
Beyond Meat at risk as competitors like Impossible Burger take root – MarketWatch, Jun. 2019
Beyond Meat breaks down after consumer group warns of fake meat chemicals – CNBC, Jun. 2019
Certified Holistic Nutritionist – Why I Stopped Being Vegan
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