DECEMBER 6, 2020.
Link to the Real. It Pays.
We’ve been trading our asses off. Jesus Christos. How hard can it be to spot a hold at a price? Harder everyday. Why? Valuations. Repeat “multiple expansion,” atop a troubled economy. And how does that end? Fugly, every fugly time.
“Hunt the beaten down cyclicals” you say? “Build a barbell” you say? Well, of course. That approach says balance lockdown plays with recovery plays–barbell. Why do you suppose we’ve just covered Ford and GM?
This story’s simple. Narrow markets, such as we’ve had for months, squeeze money into the few plays that are working. Think the mega-caps, Tesla too. Those monster runs are a bit chasey and slippery anti-trust questions now.
And the already hot cyclicals and remaining lockdown plays? Multiple expansion. And what’s that? Inflated share prices residing on fixed fundamentals. Who pays up, and again, for the exact same earnings? Absolutely everyone, until earnings come in light. Oh boy. And what does that look like? Fugly, sudden, rude. And? Did we mention–we’ve been trading our asses off? Were investors and that means trading too. That’s what we do. And we’re “Being Paid in Waves. Day Trading Alteryx. “
“Goddamnit. Alteryx–again?” Why? Because every time we turn around we’re stuffing even more cash into our fat stack due to AYX. We’ve made more money off of AYX than any other stock. Who knew? We did. Now we’re telling you. We’ve held it, played its’ earnings reports, and again we’re day trading the Grand Poobah out of it. We’ve bought it, sold it, bought it back, and sold it again, all in one day. Find the link at the bottom of the piece for our piece on playing earnings; “Alteryx. Again and Again. The Pattern You Can Play.” Fact. That same play will repeat when markets normalize, and we’ll be there for ours.
Who is Alteryx? AYX is an Irvine-based software as a service(SaaS) data analysis platform. The company contracts its’ service “by the seat.” AYX provides a coding-free ability to aggregate, blend, cleanse, analyze, and share results. How easy? Drag-and-drop. Analysis includes predictive and testable modeling, which can be built directly into a company’s workflow. How?
Orange peels and coffee grounds go in, whatever, and out pops beautiful blended cleansed data, prepped for prompt analysis that can be shared immediately. Nice. Perfect. Alteryx is good. Who doesn’t love “democratized” date? Look mom, no data scientists required. AYX transforms data into a form that almost anyone can analyze. “Everybody does that” you’re thinking? Naw, not with disparate data, data previously incompatible. Alteryx removes the costly tedium out of the blend. It’s a mulcher. Drop in an armload of autumn leaves, a string of Linux, a squirt of rum, and a twig of PowerPoint. All good–bam. Out comes analysis for everyone, like a banquet. Now everyone’s getting their wallet out. And that’s far from all.
Patterns are the key, for both AYX and us. For investors sideways markets mean cost basis building for the longer term, and trading the chop now. AYX has proved perfect. It churns up and down almost daily, sometimes as much as $5.00 a share intraday. Catching $2.00sh. is common for us–multiple times a week, or day. Fact. On December the 1st and 2nd we played it twice each day. We were paid $1-$2 a share every time. Again fact. We’ve been paid every single time we’ve bought Alteryx. Now our pattern is in and out in a day. How? Buy below $114 and set a sell for half at $116, and another at $117 or even $118. Have a look at the price action.
As indicated by the crosshairs above, and the inset window, you can see that on November the 30th AYX ranged between a low of $115.04 and a high of $120.69, or a $5.65 share price shift. Notice the length of the “wick,” the thin vertical line. The wick indicates this intraday range. The actual open and closing prices are irrelevant when day trading. Only the range and progression matter. The line chart further below displays how precisely.
Alteryx displays significant intraday “volatility,” or share price movement. Gotta have that if you hope to day trade. Patterns change, thus day trading entry and exit points shift. Patterns shift and then the share price typically stabilizes again, as you can see above. Wait for that. Example. Due to the announcement on October 5th concerning a CEO change, AYX jumped up 30% in after-hours trading. Wow. We were lucky and caught 28% of that. But then, we were watching, and as regular traders of AYX we were holding a piece. We sold it all. Trade what you know. It’s impossible to know every stock. We trade what we know, and we know Alteryx. Thus, we felt sure the share price would bled back down following that massive jump, and then reestablish a new trading range. It did.
Clarity counts. For many day trading is synonymous with stupidity. In reality day trading is simply another trading strategy. Back in the late ’90’s day trading gained notoriety as a mad and ruinous fraud. Why? A horde of relatively inexperienced traders adopted the strategy. They traded absolutely everything, with utter abandon. Guess what? It didn’t go well. Meanwhile, Wall Street was simultaneously doing so with shocking success, and had been forever. SOP.
When handled well, day trading is simply another targeted market strategy, one perfect for sideways markets. The accomplished investor knows long-term investing, swing trading, and day trading. They also understand how and when to employ each. Routinely, investors will be employing all three together in various ways. Our sideways market is a time for all.
Again, stock patterns exist for a period, and then change. There are only so many behaviors any stock or market can display; up, down, sideways, with volatility, or calm. For a day trade the chart below is truly key. An intraday “line” chart, such as the 15-minute chart below, will display any patterns that exist. It’s pure insight.
Alteryx(AYX) is a cash machine. Again, intraday volatility is the story. AYX tracks up and down repeatedly. You can work with a price that can travel $4-$6 bucks in a day. Last Tuesday Sj traded it twice for $1 share, and again twice on Wednesday, once for $2sh. and again for $1sh. That’s in and out on the day. Buy, it rises, sell, it falls, buy it back, another rise, and sell it once again. Really.
The 15-minute chart above covers most of November. The gray vertical bars represent “extended hours” sessions, while the black display the regular session. A 15-minute chart clearly demonstrates intraday movement, but even more so any multiday patterns or tendencies. One-minute charts are unnecessarily busy when looking for any patterns or tendencies, while 1-hour charts are too spare. One minute charts however are great when looking for entry/exit points, in combination with the relative strength index and the stochastic oscillator.
Is Alteryx a good trade? It’s stunningly good. Again, we’ve made more money off of AYX then any other play. Fact. AYX is volatile. When holding it as an investment we’ve been hammered down by as much as 30%, for months. What happened? We rocked back and let it ride, and we’ve never lost a thin dime in the name. Interested? Again, buy it under $114. Set a sell order for $116, or even $115. This last Thursday and Friday it proved sticky. Again, we’re now positioning to trade it twice a day, with a “half & half” strategy. More on that.
AYX can rise more than $5 in a single regular session. Often, its’ major daily moves occur in the morning. We’ve just moved to a single larger buy. We then set two graduated sell orders. Example; one buy at $ 114, followed by a half sell at $116, and the other half at $117.50 or $118. We set sell orders by the patterns we observe, and as ranges change. Why the graduated sell strategy? We simply got sick of catching only half a move. Again, right now the buy remains below $114. Watch extended hours for the best prices.
Is Alteryx a good investment? No. AYX climbed like a crazed dog out of the filthy COVID crunch. Then came their earnings report on August the 8th. It was met with true disgust and undisguised hate. Yet, out-of-hand expectations crush every growth stock, eventually, often repeatedly. The good never stay down. Investors expect the impossible. AYX has lived low since summer and was again met with disapproval upon releasing their following report.
So why trust a trade in AYX? The pattern. It’s clearly visible in the charts. Equally, the story remains intact. The stock has an established record of recovering from serious set backs. Shares are now 36% lower than their 52wk. high set on July 7th. That’s more than a third. That’s known as “derisking.” Are shares expensive?
Alteryx is still Very expensive. That’s one additional reason we feel Alteryx is now a trade. Here’s yet one more. AYX just switched head coaches. In our view, executive success in one company isn’t necessarily transferrable to the next. Maybe it works, yet no track record exists. Organizations differ, in personnel, culture, and precise business.
Current CEO Mark Anderson is brand new to this post, having just replaced brilliant cofounder Dean Stoecker back on October 5th. Stoecker remains as Chairman of the Board. Inexplicably, raving joy remains the best way to describe shareholder reaction to the switch. As we noted earlier, shares skied 30% on that after-hours announcement. And that’s why we track after-hours trading.