One lesson I have learned in this business is to never take a victory lap until you are at least 2x profitable from an entry point on any given trade.
However, with that said, it is perfectly ok to feel excited about a trade, especially if it is paying off because you were well ahead of the curve and used sound risk parameters plus exercised patience.
I did an article on Rivian (NASDAQ:RIVN) on July 30th Is Rivian Number 2 to Tesla?
But I have been on this trade for even longer.
- Do I have a Ph.D. from the Wharton School of Business? No.
- Do I have an MBA from Princeton? No.
- Do I have a corporate bottom line to follow? No.
I come to you from a different classroom.
The content and picks I share derive from my being both a Master Teacher (M.S. in Education), a Veteran Floor Trader on the NY Commodities Exchanges for 14 years.
Plus, in the last many years, I have worked as a Partner in MarketGauge.com (Financial Publishing) and a Managing Member in MGAMLLC.com (Registered Investment Advisory.)
I mention this to you as we begin 2025 as many of you do not know me, nor understand that my background is unique.
Most analysts you hear from have no trading experience and no technical analysis skills. Furthermore, many lack street smarts.
Nonetheless, in a bull market the ivory tower analysts sound smart. In a volatile market, not so much.
So, what can you learn from a trade like Rivian?
- First off, consumer instinct. I saw more and more Rivians in our hometown and across the country.
- Secondly, pay attention to the news. Rivian made deals with Volkswagen (ETR:VOWG_p), Amazon (NASDAQ:AMZN), and the US government.
- Thirdly, learn to read a chart. Rivian cleared the 50- and 200-day moving averages in November. The momentum indicated a bullish divergence.
- Fourth, find a good risk parameter. $12.00 became the base price.
- Fifth, begin with a starter position, then build it up as the stock price rallies rather than adding to a position during falling knives.
Finally, have conviction that if 1-5 line up; the consumer instinct, headlines and chart points, it is a good trade. I have boldly talked about this stock on media for months.
This past Friday, Rivian gave us the gift we waited for.
Headline
Rivian Q4 Deliveries 14,183 Vehicles (est 13,472)
- Q4 Production at Normal, Illinois 12,727 Vehicles
- Production 49,476 Vehicles; Deliveries 51,579 Vehicles
- Shortage Of Shared Component On R1 & RCV Platforms No Longer A Constraint On Production
With over a 23% gain, we now have a cushion and can go to a no loss stop or higher.
Furthermore, Rivian had a breakout over $14.00. In July 2024 the stock traded up over $18.00.
While we wait for the January Trend Trade setup, at least we can say, Santa might have come a bit late, but better late than never.
ETF Summary
(Pivotal means short-term bullish above that level and bearish below)
- S&P 500 (SPY) Good end to the week, but still in a caution phase
- Russell 2000 (IWM) 213-217 support-caution phase until it clears 230
- Dow (DIA) 420 pivotal support-caution phase and an inside day Friday
- Nasdaq (QQQ) Held up the market and the 50-DMA-now must hold 511 phase
- Regional banks (KRE) 65 resistance 58 support
- Semiconductors (SMH) Held 240 needs to clear 260
- Transportation (IYT) 66 key support held and so this lives to see another day
- Biotechnology (IBB) Like to see this clear 135
- Retail (XRT) Granny held but needs to get back over 80.50
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) Holding above key support at 78