Zack Guzman and Jared Blikre of Yahoo Finance include Brian Shannon, CMT and founder of www.alphatrends.net, who breaks down price trends and interest in Beyond Meat (BYND), Tesla (TSLA) and GameStop (GME).
ZACK GUZMAN: Well, it’s time to get technical. Jared Blikre from Yahoo Finance is supported by Brian Shannahan – sorry, Shannon – CMT and founder of alphatrends.net. And Jared, you’re looking at a couple of tickers here, one that our readers look for every day but that we haven’t talked about yet.
JARED BLIKRE: Yes, and we’ll start with Beyond Meat. And the reason I haven’t talked about it in a while is because it’s mostly going sideways. Brian, I want to ask you what are you seeing in this stock right now? You see some signs of life.
BRIAN SHANNON: I do. You know, it was a really nice start to the year last week. It showed up at low levels at low volumes. And it’s been holding those gains really well so far, right at that 50-day moving average. Now I am generally looking for a 50 day moving average that is flat until progress. And it’s interesting that if you look back 51 days ago, the stock was 165. This means that on Monday we will have a rising 50-day moving average again. We hold on to these profits. And it looks like a good risk reward to get involved here at these prices.
JARED BLIKRE: And you have a few other lines here, anchored VWAP – I know well. We have it available on our website. We actually implemented it because you promoted it. Can you explain to viewers what it is and how to use it to trade?
BRIAN SHANNON: Yes, the anchored volume-weighted average price, pronounced VWAP, is simply a representation of the average price paid for the stock over any period of time. You can actually think of it, Jared, as an average dollar cost. If you buy $ 1,000 worth of stock, you know, Apple every 12 months – every month for 12 – for a year, your volume-weighted average price is your dollar cost average. So it tells us the average price from one point.
So if we look at the red line on the graph, we see the volume weighted average price outside the peak. And what we see there is that the sellers have so far been in control from that level. But now we come and toast it. It is the buyer’s game to win now. And it tells me two things that buyers have the potential to regain control. And if they do, then we’ll see that shorts are likely to deviate from those prices and help fuel the fire higher.
JARED BLIKRE: Yes, so the bottom line is a good risk reward. Now I want to turn to Tesla. This is a stock we talk about every day. Got some anchored VWAP lines here, 50 day moving average. What do you see?
BRIAN SHANNON: Well, of course there is no shortage of opinions on Tesla. You have income next week. So we have a big catalyst here. And you know you have the Tesla fan club say it’s on the way to 1,000. And you know what? The trend is higher. So you have to look at yourself and say the trend is your friend. But what are the risks? Would I want to be concerned with a new purchase here? Not personally. I think there are a couple of things we can measure risk by. And so the name of the game here is Risk Management.
Therefore, the volume-weighted average price of the previous year often becomes a benchmark for the institutes to be measured. Do we want to make Tesla lighter if it is below the volume-weighted average price for the year? And that price is currently just below the market at around 820. So if after profit we’re below that, there’s a very good chance you’ll see a test of the 50-day moving average and the volume-weighted average price from the last earnings report. The two meet around 660.
So I think the risk for the new position is extremely high. But make your bets. Let’s see what the market says. I think you just have to manage your risk there.
JARED BLIKRE: Yes, we have about a minute left. I spoke to you about GameStop before the break. This stock is caught in an incredible short press. What do you think of what’s going on here today to this particular stock?
BRIAN SHANNON: You know, I often think what happens to a short is that the stock is going to go up and people are going to look at it and say, hey, this is just GameStop, no big deal. There is too much going on. It is not worth. Whatever. So they’ll try to sell the stock. And then the stock goes up 10% and they cover. And then it becomes a kind of perpetual short squeeze machine. It’s a game of musical chairs.
But a group is always compressed into a new group. So if you look at short interest numbers, they are spinning extremely quickly right now. So it’s a game of musical chairs, and with your part in it I would say if you want to short it out, wait for it to break. There isn’t too much if people are still ready to buy it. And so far they’re at GameStop.
JARED BLIKRE: Good advice, Brian. Thank you for joining us here. Zack, I’ll send it back to you.
BRIAN SHANNON: Thanks for having me with you, Jared.