The outperformance is magnified when we zoom out to the one-year measure. Uber stock is up 70% over the past 12 months, while Lyft is down more than 50%.
It helps that Uber stock rallied almost 30% in a four-session stretch from April 28 to May 3. It rallied 10% ahead of the earnings report, then rallied 16% in two days after reporting better-than-expected results.
Given the stock’s powerful burst, it only makes sense that Uber needs to cool off a bit before resuming its rally. Consolidation can take form through price (via a pullback) or through time (via sideways, choppy trading).
Let’s look at one major buy-the-dip area in Uber stock.
Trading Uber Stock
Daily chart of Uber stock.
Chart courtesy of TrendSpider.com
Uber stock made a monstrous push off the 200-day moving average. And even as it petered out in the $36 to $37 area in February, this area did not act as resistance amid the current rally.
In fact, Uber stock pushed through this zone and ultimately topped out at $39.23.
In the next few days, the bulls would love to see a pullback to the prior breakout zone of $36 to $37 and the first quarter high of $37.58. In other words, buyers would be looking for this prior resistance level to act as support.
If it happens soon — as in the next few days — there will be the added benefit of the rising 10-day moving average. After such a powerful rally, this measure will act as support if tbulls maintain active control of the stock.
In many cases, pullbacks and dips are incredibly healthy. Not only do they give the stock a chance to rest, but buyers get an opportunity to reload their long positions.
If support doesn’t come into play in this area, a harder fade could put the $34 to $35 area in play.
On the upside, short-term traders would likely trim on any move back into the $38.50 to $39 area, while fishing for a larger move north of $40.
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