FIZZ (National Beverage Corp.) will be added as a Long Swing Trade Setup with an entry to be triggered on any break above 43.25 which will have taken the stock clearly above this bullish falling wedge pattern as well as minor price resistance. This should be considered a very aggressive, counter-trend trade so DYODD & as always, pass if this type of ‘catch-a-falling-knife’ trade does not mesh with your trading style, risk tolerance or objectives.
FIZZ daily July 30th
FIZZ moved above the primary downtrend line yesterday but the breakout was anything but impulsive with the stock backtesting the wedge today. Ideally, you want to see breakouts from bullish (long-side) chart patterns occur on 1.5x or above the 60-100 day average volume for the stock as breakouts that occur on average or below-average volume have a higher rate of failure than those that occur on above-average volume. As such, I’d prefer to see some more upside & follow-through to the recent breakout & (so far) successful backtest so I’ll wait for a break above the 43.21 price resistance on the 60-minute chart below (plus a few more cents for good measure) to trigger a long entry for an official swing trade on a break above 43.25.
FIZZ 60-min July 30th
Personally, I like to take positions in stocks when they reach extremes where nearly everyone wants to be on the other side of the trade, such as the BYND short trade idea posted in the trading room on Friday while BYND had just made a new all-time high following a very powerful 7-trading session streak of gains, posting the setup when the stock was trading at 238.50, less than 4-minutes & mere basis points before the stock hit that all-time high, with the stock falling over 22% from there in less than 2 full trading sessions.
FIZZ daily Sept 20th
In fact, the last time that I posted FIZZ as a trade idea was in this post back on Sept 20, 2017 as an official short trade, just 7 trading sessions after the mega bull market in the stock ended with the all-time high on Sept 11th, with the stock plunging roughly 70% (so far) from there (chart from that trade setup above). Just as nearly everyone was uber-bullish & wanted to be long FIZZ back then, it is clear that the masses are extremely bearish on FIZZ at this time as evidenced by both the string of recently bearish articles (recent examples at bottom of this post) as well as the massive & all-time high short interest (shown below) in the stock at this time.
FIZZ short interest July 30th
Whether the bear market in FIZZ has much more room to run or not, one would have a hard time arguing that the ingredients for a powerful short-squeeze aren’t in place based on both the potentially bullish technicals coupled with the extreme bearish sentiment & high short-interest in the stock. Other than a bullish breakout that could potential begin to trigger a vicious cycle of short-covering based on the technicals (i.e.- a break above each resistance level overhead triggering more stop-loss orders on short positions, thereby sending the stock higher to trigger even more stops and so on) the company is scheduled to report earnings on Sept 25th, which also has the potential to trigger a rally as a fundamental catalyst.
Either way, this is only a trade setup at this time with an entry pending & even if FIZZ becomes an Active Trade, as with any position, it should only represent a small sliver of the pie that makes up a diversified portfolio. Due to the aggressive nature of this heavily shorted stock which is clearly entrenched in an unmistakable downtrend/bear market, the suggested beta-adjusted position size for this trade is 0.90 (or less, depending on one’s risk tolerance).
The price targets are T1 at 46.09, T2 at 50.03 & T3 at 59.92. The maximum suggested stop (if targeting T3) is 38.49 (or a higher stop using a 3:1 or better R/R if only targeting T1 or T2).
Zach’s article published yesterday, July 29th: Bear of the Day: National Beverage (FIZZ)
InvestorPlace article published July 25th: 10 Heavily Shorted Stocks to Sell — Because the Bears Are Right
note: I did not cherry-pick bearish articles while skipping bullish articles. I simply did a quick scan of the recent articles & only saw bearish headlines, none bullish. Of course, that in no way guarantees the stock will not continue to fall.