Bears can continue to bet against and badmouth Square (NYSE:SQ). And I’m sure they will too. But the evidence off and on the price chart still points to SQ stock’s battleground status being won by bullish investors. Let me explain.
Make no mistake about it, mobile payments innovator Square’s earnings report a month ago was a solid one. Square delivered growth-backed and better-than-expected revenues, as well as profits which jumped by 90% while easily topping Street views. The report however failed to stop SQ stock’s bears from coming out swinging.
Warnings that Square’s solid growth outlook was still lacking were offered. InvestorPlace’s Vince Martin could be included in that group. And Square stock’s slightly weaker margins had other investors concerned despite the modest decline being tied to beneficial investment spending.
Then there was news regarding Africa. Earlier this month, bears demonized CEO Jack Dorsey’s announced intentions to spend three to six months in 2020 in Africa. The trip’s mission is to explore the developing market for future Square business opportunities. Yet it turned into an occasion for bears to warn the move as a reckless one, the equivalent of leaving a boat without its captain.
Will the bearish haranguing ever end for SQ stock? Probably not. More important, each time less-than-friendly fire has been heard and shares gunned down, this battleground stock continues to build the long-term case for higher prices aligned with Square’s very attractive growth narrative.
Square Stock Monthly Price Chart
Source: Charts by TradingView
All stocks correct. Even the strongest and most enduring companies such as Apple (NASDAQ:AAPL) will have periods when shares come under significant pressure. At the end of the day, it amounts to a time of healthy technical-based cleansing. Right now, SQ stock is busy constructing just that sort of platform.
Technically, the monthly chart illustrates a very large “W” or double-bottom shaped base in its second year of development. If we’re right, Square stock should continue to rally and stage a pattern breakout to fresh highs in 2020. That’s potentially a lot of upside and profits for Square bulls.
As it stands, September’s hammer pivot low has confirmed the pattern bottom with October’s trade-through signal. Shares also maintain a favorable stochastics setup right now. Lastly, with the SQ stock price less than 3% above the October’s buy-point, there’s an even more obvious and compelling case to respect the price chart first and leave those ever-present headline warnings at the door.
Disclosure: Investment accounts under Christopher Tyler’s management own positions in Square (SQ) stock and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.
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