Ok so here it is stock and options traders. January 10th, we briefly posted about a few stock symbols that were ripe for breaking out. One of them was the company Pandora ticker symbol “P”. For the newbies I thought I would do a deeper analysis on Pandora so let’s dive into it.
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A little background Pandora Radio is an Internet radio service provider company that offers a personalized listening experience for each of its users. The company allows you to pick your favorite artist and plays music based on that genre and style as well as adjust the listening/music selection based on your real time feedback of giving a song a thumbs up or thumbs down.
Pandora Radio has secured several contracts with TV manufactures, which allows you to play the Pandora application on your smart TV as well as on your smart phone (i.e. IPhone, Blackberry, Android).
Pandora has also secured contracts car manufacturers such as KIA, Acura, and Ford will be adding Pandora to its 2012 truck Line up. With that being said, let’s dive into the chart of the stock and see where the opportunity for you to get paid lies.
When we first took a look at Pandora it was on Jan 10’th Pandora was coming out of a tight volatility squeeze (the grey shaded channel) and just broken above the upper Bollinger band (see green arrow). This triggered a buy signal because of the upward momentum coming out of a sideways channel (again see grey shaded area) with a stop loss set under Jan 10th’s opening price of $10.90 in case this break out ends up being a fake out. If you missed the initial entry the stock gave you another chance to buy in on Jan 12th due to the 3 day rule (the 3 day rule states most stocks will not rise more than 3 days in a row before giving a retracement (i.e. profit taking from the masses) but as long as the trend is in tack the professionals use that as a day to enter the stock while the amateurs are panicking.
The stock since then is still trading in the upper half tagging the top of the Bollinger band indicating a strong uptrend again today we had another break out day above the upper Bollinger band. I also included a snapshot of the companies previous Quarters of sales. As you can see the company sales have increased quarter after quarter and has almost doubled since a year ago. When we first featured Pandora in a blog at The Brown Report. we looked at the January expiration $10 option which was trading for $1.50 at the time. Today that option is going for $3.00. An investor could have doubled their money in just 8 days. What does that mean in dollars? 10 contracts purchased at $10.00 would have cost you $1,500 plus commission and today would be worth $3,000 in just 8 days and the stock appears to have more room to run. Does that get you excited or what? Stay tuned for our next Stock and Options Analysis.
-Jason Brown- Stock Market Coach