Chart Of The Day: Block Technicals Bottom Even As Cathie Wood Dumps Shares

  • Stock Market Analysis
  • Editor's Pick

In early February, ARK Investment Management sold $21 million worth of PayPal Holdings (NASDAQ: PYPL ) shares after the digital payments company announced it had abandoned growth plans put in place during 2021. The Cathie Wood-led investment management firm then immediately snapped up the stock of PYPL's rival in the fintech space, Block (NYSE: SQ ).

On Monday, news broke that Wood's ARK Fintech fund had "dumped 281,910 shares of Block...valued at $38 million." SQ has lost about 46% over the past six months, yet Wood's got rid of the shares less than two months after picking them up during a broad market selloff.

Why would Cathie Wood's fund sell SQ now? No known company fundamentals have changed.

Perhaps, ARK wanted to lock in profits after the price rose roughly 15% during the period in which they held the stock. Maybe the much followed stock picker knows something we don't. But then we're calling a bottom on the stock, making it a shame that Wood's didn't take note of the stock's technicals before selling it off.

SQ Daily

The stock just completed an H&S bottom, whose upside breakout included the price crossing the 50 DMA amid confirmation by the price-based MACD and momentum-based RSI indicators.

Trading Strategies

Conservative traders should wait for the price to make a new high in order break free of the consolidation above the neckline, then retest the would-be support of the new accumulation before taking a long position.

Moderate traders would wait for the same consolidation breakout and a buying dip.

Aggressive traders could enter a long position now.

Trade Sample - Aggressive Long Position

  • Entry: $135
  • Stop-Loss: $130
  • Risk: $5
  • Target: $155
  • Reward: $20
  • Risk-Reward Ratio: 1:4

Author's Note: This is just a sample. The actual analysis is in the body of the text. Analysis studies the finer points of the item in question. The technical analysis is to get on the side of statistics, an initiative that improves significantly the more consistently you trade. The sample merely showcases the essential points of a generic trade plan. To trade successfully you have to develop a personal skillset that draws a plan that meets your personal needs, such as timing, budget, and temperament. Until you learn how to customize your trading plans, use ours for educational purposes, not profit. Otherwise you'll end up with neither. That's guaranteed, and no money back.

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