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Anchored VWAP away in Beyond Meat, iShares Biotech ETF and Tesla

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Chartered Market Technician and AlphaTrends Founder Brian Shannon and Yahoo Finance's Jared Blikre break down the latest market action and levels of interest in Beyond Meat (BYND), the iShares Nasdaq Biotech ETF (IBB) and Tesla (TSLA), with an emphasis of how to use (and pronounce) anchored VWAP.

Video Transcript

ZACK GUZMAN: Let's get technical on the trading action we've been seeing play out here, including a look at Beyond Meat, one of those names that got caught up in that retail frenzy a couple of weeks ago. And here to chat more about that is Yahoo Finance's Jared Blikre, along with a special guest. Jared.

JARED BLIKRE: All right, we've got Brian Shannon here, founder of alphatrends.net. And let's go into Beyond because this is a stock we were talking about a month ago, starting to show some bullish signs. And it looks like it got caught up in the GameStop volatility, although I didn't really see it part of the Reddit phenomenon. But a lot of stocks just got caught up in it. So what are you seeing in this chart right now?

BRIAN SHANNON: Yeah, the last time I was on, Jared, the stock was, I think, 137 or so. And two days later, it gapped up to 200 plus. And we were talking about GameStop, and I had actually mentioned that there was a sizable short position in Beyond. I certainly didn't expect the stock to run from 135, 137 to 220 in two days. So I took the opportunity, you know, don't look the gift horse in the mouth to feed some stock out into that strength, and then got stopped out of the balance a couple of days later. But now I think it's back to a place where it's a low risk area to reload for another thrust higher in shares of Beyond.

JARED BLIKRE: Well, let me just-- why don't want to get you to break down this blue line, which is anchored VWAP-- in fact, this is the Volume Weighted Average Price-- since the beginning of the year. And you'll also notice I'm still calling it VWAP-- force of habit there. Yesterday in the hearings, none other than Ken Griffin, he was pronouncing it VWAP, and that's I know the way you pronounce it, so maybe I'm wrong here.

BRIAN SHANNON: [LAUGHS] Well, regardless of what it is, it's a great tool for really helping us determine who's in control from a certain point in time. And Ken actually said something really important that I think a lot of people missed. And that was that he's talking about buying on behalf of institutions based on the daily volume weighted average price, the weekly, or he even mentioned the monthly.

Also, you've got the year to date volume weighted average price. And that's that blue line we're looking at on Beyond right now. And what we saw is the stock pulled back to that area. It also closed the gap from that big move higher. So it tells me I think that the profit taking is most likely done from that big move higher. And now that it's back to the average price for the year, it's in a better position where institutions don't feel like they're chasing the stock anymore. They're getting the average price and feeling good about their purchase.

So I think it makes a great purchase right in this area with the stock just below maybe-- you know, here it is at 164. I think it would be a little too tight just below yesterday's low, but maybe about 160 or so. And it wouldn't be a surprise to me to see the stock return north of 200 here soon. And Bill Gates is on the bandwagon for fake meat, too.

JARED BLIKRE: That never hurts. If you get Bill Gates or Warren Buffett on your side, tend to see some institutional support there. Well, I want to move to a different industry, and that is biotech. We saw some individual names in biotech also getting caught up in Reddit. But this, in particular, is the iShares NASDAQ Biotech ETF. So it's an average of a bunch of different components. What are you seeing in this?

BRIAN SHANNON: Well, we see a clear uptrend, Jared. I mean, just a beautiful pattern of higher highs and higher lows. And kind of the same thing-- we have the year to date volume weighted average price just below. That's the blue line. And then the red line you see there is the rising 50-day moving average. So what we see is a pullback.

And I don't like to buy pullbacks necessarily as they're pulling back. But when they come into a certain area of technical significance, such as the year to date volume weighted average price, it looks to me like the old phrase that innocent until proven guilty, a trend once established more likely to continue than reverse. That this, we should treat it as a pullback, and it's getting ready to move-- make its next move higher again. And if it fails, again, we're in a low risk area that if it does fail, you don't have to risk a whole lot. You could put a tight stop, you know, probably just underneath that rising 50-day moving average.

JARED BLIKRE: All right, great. Well, it looks like we got a little bit more time. We were chatting about Tesla briefly. This is a stock that kind of broke 800. That was a red flag for me. But what are you seeing right now?

BRIAN SHANNON: Yeah, I mean, when we-- last time we spoke, it was just ahead of earnings in Tesla. And I had made a point that I was cautious ahead of the earnings because it's had such a good run. And now, the stock is 50 points lower from there. So, you know, it always pays to be a little bit cautious ahead of earnings.

But now we're seeing the stock is kind of settling onto its rising 50-day moving average. So I think it's just a little bit neutral here right now. Not quite ready to buy, but certainly in an area where it's going to make sense to start looking for emerging signs of strength, again, to see if it can continue to move higher, or if it's going to be a more-- a deeper correction or maybe just something that needs some more time to digest the big gains of the last year or so.

JARED BLIKRE: All right, Brian Shannon of AlphaTrends, thanks for joining us. Tossing it back to you, Zack.

BRIAN SHANNON: Thanks, Jared.

ZACK GUZMAN: All right, Jared Blikre, appreciate that.