As Robinhood Stock Outperforms The S&P 500, Here's What May Come Next

Robinhood Markets, Inc (NASDAQ HOOD) was outperforming the general market on Tuesday, holding slightly higher while the S&P 500 slid over 1% at one point.

At 10:07 a.m. an institutional trader placed a massive block trade on Robinhood, purchasing 500,000 shares above the ask at $10.30. The trade represents a whopping $5.15-million bullish bet the stock will trade higher.

Robinhood has developed bullish signs on the daily chart that suggest the stock has room to run, although lower-than-average volume on Tuesday looked to be stalling a notable move higher. If the triple bottom pattern continues to dominate, the delay may be short-lived and the stock may catch momentum over the coming days.

A double bottom pattern is a reversal indicator that shows a stock has dropped to a key support level, rebounded, back tested the level as support and is likely to rebound again. It is possible the stock may retest the level as support again, creating a triple bottom or even quadruple bottom pattern.

The formation is always identified after a security has dropped in price and is at the bottom of a downtrend, while a bearish double top pattern is always found in an uptrend. A spike in volume confirms the double bottom pattern was recognized, and subsequent increasing volume may indicate the stock will reverse into an uptrend.

• Aggressive bullish traders may choose to take a position when the stock’s volume spikes after the second retest of the support level. Conservative bullish traders may wait to take a position when the stock’s share price has surpassed the level of the initial rebound (the high before the second bounce from the support level).
• Bearish traders may choose to open a short position if the stock rejects at the level of the first rebound or if the stock falls beneath the key support level it created the double bottom pattern at.

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The Robinhood Chart: On May 24, May 25 and May 26, Robinhood formed a bullish triple bottom pattern. On Friday, the stock reacted to the formation by shooting up almost 12%.

If Robinhood continues to react bullishly to the triple bottom pattern, the stock may gain enough power to pop up above the $10.92 level, which coincides with the 50-day simple moving average (SMA).

• If Robinhood can gain the resistance level and the 50-day SMA as support, the stock will also negate the downtrend in which it has been trading since May 13. If Robinhood can print a higher high above the $10.55 level, the stock will then need to form a higher low above $8.97 to confirm an uptrend is in the cards.
• Robinhood is trading above the eight-day and 21-day exponential moving averages (EMAs), and on Tuesday the eight-day EMA was attempting to cross over the 21-day. If Robinhood is able to hold above $10, the eight-day EMA will cross above the 21-day, which would give bullish traders more confidence going forward.
• Robinhood has resistance above at $10.92 and $12.77 and support below at $9.94 and $7.71.

See Also: How to Read Candlestick Charts for Beginners