Where can we find big winning trades?
Newer companies.
Even though they’re risky and often very volatile, younger, newer companies are a great place to find large moves.
How can we define newer companies?
If we can’t see very many previous trades on their charts, it’s new.
And CRWD (CrowdStrike) fit that description in 2023.
Here’s the Daily chart:
As you can see, the long-term simple moving average had just recently had enough data to plot its line.
And interestingly, CRWD was below “fair value”. That’s a signal to pay attention.
If we then switch to a monthly chart and wait for two consecutive closes above the 12-month moving average, we get an entry around $147 in July ‘23:
And we would have seen CRWD go up to almost $400.
When do we get out?
We wait for a close below our moving average, and we got that in August 2024 at $232.
Yes, we gave back some gains.
But we also got a huge winner.
A new company’s first trade on the monthly chart was a big one.
Happy trading,
— Scott Welsh
P.S. As a reminder, these plays are based on my longer-term Weinstein Stage Analysis method. The chart above uses weekly candles and a 30 week simple moving average. For details on this method, see my explanation on this Ask The Pros episode starting at timestamp 20:45.
