Jack does this, Jack does that. It’s what’s behind Twitter (NYSE:TWTR) stock’s whereabouts these days in hotly-contested trading. But for Jack Dorsey’s Square (NYSE:SQ), based on what we’re seeing off and on the price chart, it’s time to respect the beard, but be wary of rogue attacks with a hedged Square stock position.
In recent days Twitter, the former unofficial mouthpiece of President Trump, has come under fire after CEO Jack Dorsey’s decision to permanently ban Donald J. Trump from the platform. I’m confident I’m not telling readers anything they haven’t heard, read, or watched ad nauseum. Bulls and bears are up in arms and in each other’s crosshairs in a media circus. Stay tuned I suppose.
Less controversial, Jack’s other company, fintech mobile banking platform Square has proven immune to today’s political theater following a stellar 2020. And for good reason too.
Despite more than a few moans and warnings of obvious challenges SQ would face as the coronavirus unfolded, consensus opinion turned out to be wildly wrong. Square has knocked it out of the (empty) ballpark. Most recently, the company’s Q3 results released in November revealed ballooning sales and earnings growth, while also easily topping Street views.
Now with mass vaccinations underway and taking us one giant step closer to putting Covid-19 in the rearview mirror, is it possible history will repeat? Could there be a new Roaring 20’s not unlike the era following the Spanish Flu? Maybe. And betting against Square in that type of environment would be a recipe for disaster given how incredibly well this fintech company has performed during lockdowns, today’s socially-distanced reality and small businesses folding left and right.
Regardless, the bottom-line is that Square is well-positioned to thrive given smart moves with its Square Cash App, merchant services, Square Online Store and quite simply, top-notch business execution that has allowed it to thrive, not just survive in the pandemic.
Toss in an ace in the hole with Square’s recent bank charter or its resourceful early adaption into cryptocurrency and investment in Bitcoin and I can’t help but think #inJackwetrust could become a popular movement once you get past that crazy beard.
Square Stock Weekly Price Chart
Source: Charts by TradingView
Square stock is up about 7% entering the end of the second trading week in 2021. That’s not too shabby following last year’s near 250% gain in shares. If SQ kept up this pace that would amount to a gain of about 180%. That might be stretch in more than one way. Still, investors shouldn’t be dissuaded from being upbeat today’s bullish trend still has its legs.
Technically, SQ is trading in an uptrend and upon a slightly closer examination, a mirror leg. If completed, the mirror leg would fulfill a Fibonacci-based two-step pattern where CD matches the distance of leg AB after a brief countertrend at BC. That would take Square towards $310. And based on our drawn in uptrend line, that price action looks possible within the next several months.
Ideally and before buying SQ, a neutralized but bearishly-positioned weekly stochastics will signal a bullish crossover. In a less perfect world, if shares stage a breakout from its small weekly consolidation pattern, stochastics should be flat rather than pointing down in order to increase the entry’s odds of success.
Likewise, if Square stock instead turns south in the days ahead and a fully-formed weekly low can develop, I’d also advise only making a buy decision if stochastics has your back. And while it’s okay to trust Jack and the price chart will continue to do the right thing after a purchase, I’d always suggest pledging allegiance to a stock collar for bulletproof positioning.
Stocks Owned: Investment accounts under Christopher Tyler’s management, directly or indirectly, hold positions in Bitcoin (GBTC) but no other securities mentioned in this article.
The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.