In spite of the buzz that surrounded Wall Street’s must have IPO, SNAP, was a horrendous IPO for initial investors. The price peaked on March 3rd, just one day after it opened and been falling ever since. In fact it lost almost 60% (peak to trough) leaving the early adopters holding a much lighter bag. What is really interesting is that the low made in price is exactly the average age of the apps user base. Coincidence? You be the judge J

For those looking for a short-intermediate term trade or a patient investor who wants to own SNAP long term, the chart is presenting investors an interesting setup.  As you can see yesterday’s close created a hammer candlestick on very large volume indicating a potential bottom is in place. For confirmation, you need to see follow through on the next day which is exactly what happened as price gapped higher and again on above average volume. Armed with this technical setup and combined with the fact RSJ momentum has created an oversold, (positive) divergent low we have an almost ideal, low risk-high reward buying opportunity.  With no real resistance until price reaches the first upside target at the bottom of the first gap (a 35% + rise) and a stop just below Thursday’s hammer candle low, substantially exceeds the desired 3:1 reward to risk ratio I want to see before committing investment capital. If SNAP really has legs and glides right through the lower gap, the next target would be the upper gap, some 80% from its bottom.   

In spite of the compelling upside potential, because of the limitations restrictions SNAP management has built into the company’s public shares, I have no interest in owning them long term. As such, I view any investment in SNAP as a short term rental.