SNOW Trade Recap

In my previous article Why SNOW’s Post-Earnings Setup Looks Like a Bullish Opportunity, I laid out a detailed trade plan for $Snowflake(SNOW)$, targeting a bullish swing trade driven by technical signals and solid fundamentals. The trade centered around a breakout above the $175 resistance level, with a target price of $187. Here's how the trade unfolded and the lessons learned along the way.

Snippet of trade plan from article posted on 11-26

Execution and Exit

The trade unfolded exactly as planned. Snowflake’s share price broke above $175 daily close, triggering my entry. The momentum carried the price higher, reaching my target price of $187 during premarket trading.

I exited the trade when the price traded around $186 during the previous day’s regular session, slightly below my target. Here’s why:

1. High Implied Volatility (IV): As the price surged, IV increased, boosting the value of my options significantly. This made securing profits earlier more attractive, as IV can deflate quickly if momentum stalls.

2. Risk Management: While my target price was $187, I didn’t want to risk a potential round trip—where gains evaporate if the price pulls back. Locking in profits slightly early ensured I captured the bulk of the move without overextending my risk.

This approach turned out to be the right call, as the price hovered around $186-$187 but showed signs of resistance near my target.

SNOW Hourly Chart

The trade was a success, delivering the expected upside while adhering to my predefined risk management rules. Here’s what I took away from this experience:

1. Stick to the Plan, but Stay Flexible: My initial plan was to hold until $187, but securing profits at $186 was a smart adjustment given the high IV and market conditions. Being flexible doesn’t mean abandoning the plan; it means adapting to real-time price action.

2. Technical Breakouts Work, But Timing Matters: The breakout above $175 confirmed strong momentum. However, timing my entry based on price action was crucial to avoiding a false breakout.

3. Options Amplify Returns, but Require Careful Management: Choosing the right expiration date and strike price allowed me to benefit from leverage while mitigating risk. However, options can be volatile, so knowing when to exit is key.

4. Take Profits When You Can: The market doesn’t always cooperate perfectly, so it’s wise to lock in gains slightly before the target is reached, especially in short-term trades.

While I’ve exited this trade, I still see long-term potential for Snowflake. The company’s fundamentals remain strong, particularly with its focus on AI and data cloud solutions. However, I’m cautious about re-entering at this level, as the stock could consolidate after hitting resistance around $187.

For now, I’m watching the following levels:

• Support: $175-$178, which was the breakout level and could act as strong support.

• Resistance: $187-$190, which has proven to be a tough ceiling. A break above this range could signal the next leg up.

If the price pulls back to $175-$178 or consolidates for a few days, I might consider another swing trade, depending on market conditions.

This Snowflake trade was a textbook example of planning, execution, and risk management. By identifying a clear entry, target, and stop-loss, I was able to capitalize on the stock’s momentum without exposing myself to unnecessary risk.

While not every trade will go as smoothly, this reinforces the importance of sticking to a well-thought-out plan and adapting to market conditions when necessary.

Are you bullish on its long-term prospects, or do you see better opportunities elsewhere?

Let’s discuss potential trade opportunities!

@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @TigerSG

Disclaimer: This is a general trade analysis and not financial advice. Always conduct your own research before making any investment decisions.