Trading the Hot New IPOs

I’ve been trading Palantir Technologies (PLTR) for the last two months, and during that time frame, there’s been a variety of trades, explains Danielle Shay of Simpler Trading.

These trades have been a collection of butterflies at my target zones (at $30 and $35) and long calls.

I’ve been trading this ticker because I’ve been enjoying trading the hot new IPOs that have come onto the market, as all of the attention they’re given can equal some great momentum moves. PLTR has been no different.

So Why PLTR:

Prior, and directly after their first earnings report last quarter, the ticker showed some great momentum to the upside. After that momentum waned around $32 a share, it pulled back and started to squeeze (which of course you know, is the foundation of everything I do!).

The most recent squeeze occurred around the 34 EMA. It was a great pullback zone and great spot for entry. Keep in mind, that when a ticker squeezes, there’s normally going to be a pullback as that’s what occurs when a stock is in consolidation. That pullback zone provided a great spot for entries for both butterflies and long calls. 

PLTR - Entry Chart:

Here’s a snapshot of what PLTR looked like when I got in. You can see that the TrendStrength Turbo candles turned red because they were at the 34 EMA. The Turbo VZO also got oversold, which is another great buy signal. And of course, we have the SqueezePro, which showed the slingshot squeeze that was forming.

Playing the Fly: 

Now, even though butterflies are my favorite, I’ll note that it’s been tricky with this ticker, as timing the target has been a little tricky. PLTR has stayed in consolidation since it made the high in December and waiting for it to break out has tested my patience. There were a couple butterflies I had to close because they just didn’t break out in time. That’s why in this case, due to timing, the long calls worked out better. 

Here is the move that (finally!) occurred in PLTR on Friday, which then continued into Monday. 

As you can see, the momentum in the squeeze shifted, along with the shift in volume you can see via the TurboVZO. 

Overall, I did have some flies that finally made the $30 price target (one I was waiting for a month). These flies were close to perfect. However, what would have made them even better were if the expiration date was seven days less. I did have one on at that expiration date, but I didn’t think it would make it there in time, so sadly I took it off. 

Overall, this combination of a hot stock, the TurboVZO, SqueezePro, and a combo of flies and calls, ended up with a nice trade that I took in the Mastery.

To learn more about Danielle Shay, visit SimplerTrading.com.