PreMarket Prep Stock Of The Day: Trade Desk
Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.
On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.
When the market goes up, not all stocks go up. When the market goes down, not all stocks go down. This makes it essential to be aware of the rotation in the markets to navigate volatility.
Every day on the PreMarket Prep Show, we discuss the rotation in stocks and the implications for the upcoming session.
On Monday, three was a clear shift from growth to value as some of the high-flying technology names were sold and value stocks such as Apple Inc (NASDAQ:AAPL) were bought.
The PreMarket Prep Stock of the Day, The Trade Desk Inc (NASDAQ:TTD), was one of the tech stocks that took a beating.
Trade Desk's Monster Rally Off March Low: After ending 2019 at $259.78, the issue sprinted to $323.78 in February and then crumbled with the broad market in March. The issue retreated 58% from its peak when it bottomed in March at $136.
That low came in just below its February 2019 low ($138.58) and well above its January 2019 low ($109.38). It rebounded to end March flat at $197,85.
Investors had one more chance to get long in that area when Trade Desk bottomed in June at $196.
On Dec. 22, the issue topped out at $972.80 and posted its all-time closing high that day as well at $971.12. From the March low to the December peak marks a 615% return.
A Double Top And Lights Out: High-priced issues such as The Trade Desk take a few sessions to find a major top or bottom.
Its high price and low volume do not allow larger plays to move in and out of big blocks easily — meaning that it may days or even weeks to unload a large stake.
Looking at the charts after the fact, it was evident that a large player or players were trying to unload into strength, which is much easier to do, at the $950 area.
In four consecutive sessions (Dec. 15-18), all of Trade Desk's daily highs were in the $941.80-$959.08 range, making $950 the middle.
Once those sellers were mopped up, it continued higher before making a double top on Dec. 22 ($972.80) and Dec. 23 ($970).
Interestingly, the issue put in another pair of matching highs last Thursday ($943.440) and on Monday ($941.68).
Selling Into Weakness: The sellers at the $950 area may have lamented their sales a few days after when Trade Desk continued higher, but are feeling really good right now.
On Monday, when the rotation started in earnest, sellers had to slam bids in order to exit the issue, instead of getting lifted on their offers.
In addition, they are fighting sophisticated algorithms that can sniff out large sellers and step in front of their orders, forcing them to sell at lower and lower prices.
Case in point: the price action on Monday. After a higher opening print, which turned out to be the high for the day ($941.68), sellers engulfed the issue. As a result, it shed nearly $100 on a closing basis, falling from $931.77 to $832.62.
PreMarket Prep On 'The Day After': On many occasions, a large one-day move is not a one-off in either direction. Often there is follow-through on an exaggerated move, as either the sellers are not done yet or others are still willing to take profits after such an enormous rally in this scenario.When the issue was being discussed on Tuesday's show, it was trading lightly in the green by nearly $8 at the $640 area.
“Monday was day one of the sell-off” was co-host Dennis Dick's first comment.
“It’s not always the best to be the first one in today, see how it trades off the open and at least wait to see if it has stabilized. I do not foresee $830 being the low for this move.”
The full discussion on the issue from today’s show can be found here:
Trade Desk's Price Action During The Regular Session: Once again, the opening tick ($840.31) stands as the high for the session.
When it breached Monday’s low ($830.18), the pace of the decline accelerated. The stock ended Tuesday's session down 1.48% at $820.29.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.