Getting a Jump On the SONO Rally
by Mike Paulenoff
October 3, 2020 • 1:00 AM EDT
Back on Sep 16, Mike Paulenoff told MPTrader members that Sonos (SONO), the under-the-radar, work-at-home speaker company, had triggered initial buy signals.
Mike explained that the stock, which was trading at 14.35/36 at the time, had climbed above its up-turning 10 and 17 DMAs, in route to a challenge of the "flattish" 50 DMA, now at 14.75.
He wrote: "The recent low at 12.40 on 9/04 represents an exact 50% retracement of the major upleg from the March low at 6.58 to the July high at 17.83, and as such, the sharp upturn from 12.40 to 14.36 during the past week or so, is a technical signal that a correction within an otherwise bull phase is complete."
SONO went on to reach a high of 16.10 this past week, up 12% from Mike's Sep 16 alert, and on Wednesday Sep 30, Mike wrote:
"SONO has popped above its flattening 50 DMA (14.56) today, extending the rally off of the 9/04 corrective low at 12.40. The longer SONO remains above 14.56, the more likely it accelerates towards 17.00 next, in route to a full-fledged test of the 7/23 high at 17.83."
See the SONO chart below.
From a macro perspective, with Covid again rearing its ugly head in a very public way, directly impacting the Trump Administration, SONO could also benefit from another round of stay-at-home spending and "Covid stocks" generally attract another wave of investor interest.
Join Mike and his MPTrader community as they monitor SONO in the days and weeks ahead.
Mike Paulenoff is the author of MPTrader.com, a real-time diary of his technical analysis & trade alerts on
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On Thursday of this past week, Mike Paulenoff alerted MPTrader members of a long set-up in CRM (salesforce.com), writing:
"After making yet another new multi-month corrective low at 212.98 last Friday, CRM has turned up and has climbed above initial resistance at 219.50-220.00, which triggered an initial 'long alert' in my work."
Mike added: "My work argues that CRM has turned up, and has triggered a preliminary buy signal.
Last Wednesday afternoon (Jan 13), with the IWM at 210.76, Mike Paulenoff told MPTrader members:
"The Russell 2000 Small Cap ETF is just about 0.5% off of its all time high. As long as any weakness is contained above 204.30, my near-term pattern set up from the 1/04 pullback low at 190.94 is poised for still higher ATHs above 211.73."
The IWM reached a high of 215 the very next day.
Back on Dec 2, after salesforce.com (CRM) reported strong earnings but price languished, Mike Paulenoff told MPTrader members:
"Weakness in reaction to the news has violated the prior significant near term pivot low at 228.66 (10/30), triggering the Bearish Scenario (Red line) that calls for a deeper correction that projects into the 220 area next, and if violated, to the 205 - 200 target zone.
On the evening of November 30, after Zoom Video Communications (ZM) reported earnings, Mike Paulenoff cautioned MPTrader members about the stock;
"My pattern work argues that ZM started a major correction off of its 10/20 all-time high of 588.54 into the 11/10 low at 366.28. The rally from the 11/10 low at 366.28 to today's high at 487.79 (+33%) to my mind represents an intervening recovery bounce prior to a second bout of weakness that completes the larger corrective process.
During late November into early December, Mike Paulenoff became increasingly concerned about the price behavior of Facebook (FB).
The stock not only was grossly underperforming the NDX but also was in the news constantly in an unflattering light regarding its leader, Mark Zuckerberg, and censorship accusations. Since early November, the NDX is up about 10%, while FB is unchanged.
