*TA as of 7/3/24
Hi everyone, today I’ll be updating my TA on a fintech company:
SoFi Technologies, Inc. (NASDAQ: SOFI)
SOFI has been constrained by a long-term resistance trendline (purple) dating back to just after it IPO’ed in 2021. This line has held firm and prevented bulls from taking it higher in the shorter term. Notice how SOFI’s RSI continues to flash a near-term consolidation pattern with lower highs and higher lows.
On Monday, the stock properly rejected the 9.03 level around the resistance trendline and pushed lower. On Tuesday, the company announced a convertible note offering which raised concerns about dilution. However, the offering should ultimately drive long-term value as the company would be able to retire debt and also raise new debt at lower interest rates. Today’s trading session saw a retest of the 7.23 support level where there is strong support, as well as the monthly 20MA around 7.18. Over the past 2 days, the stock did more than 100m in volume, as institutions bought up shares panic sold by retail on the word “offering”. In the process of doing so, the stock also formed a bullish divergence. If anything, this was most likely an irrational sell-off and a gross overreaction to the offering that coincided with a retest of strong support.
Note that SOFI is also bound by a shorter-term resistance in the form of a symmetrical triangle (red trendlines). Ultimately, we want to see both the red and purple trendlines be broken out of before it can push higher. As an investor, I have been buying the capitulation. As the pattern grows tighter and tighter, SOFI looks more and more like a “coiled spring”. Forming a higher high above 9.03 is a suitable short-term goal for the stock. For FOMO to kick in, it has to break above 10.28. A breakdown below 7.23 will see a retest of 6.50s, and in an extreme case, a move back towards 5s.
In the long-term, institutions continue to accumulate. This tells me, if anything, that once we clear major resistances, we will see a long-term sustained bullish trend. I am positioned for that.
Sentiment: BUY
Summary (with Price Targets - NFA):
Bounded by long-term IPO resistance trendline as well as near-term symmetrical triangle consolidation pattern. Holding 7.23 is key for a move back towards 8.60s and higher, with a long-term measured move to 13.86 and higher. Otherwise, the stock could see 6.50 and lower.
Institutions have been diligently buying up this 7.20s area, suggesting that investors can consider adding more shares around here for the long-term.
All right, that’s it for this newsletter. Till next time!
$SoFi Technologies Inc.(SOFI)$ $PayPal(PYPL)$ $Upstart Holdings, Inc.(UPST)$ $Affirm Holdings, Inc.(AFRM)$ $ARK Fintech Innovation ETF(ARKF)$
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