Growth stocks have been in a world of pain, but it does look like the group is trying to bottom. Just look at Pinterest PINS stock.
I like to look for 35% to 50% declines in high-quality growth stocks. That’s when I start to poke around the group and accumulate these names. Historically, that’s a great time to get long, although the post-COVID rally makes that rule of thumb a little more difficult to maneuver.
In any regard, PINS stock is trying to find its footing. Here’s some encouraging signs I’m seeing in this one.
In looking at the weekly chart, I see five consecutive weeks of decline, followed by a doji-ish hold of the 50-week moving average.
That comes after three consecutive weeks of declining volume and a little bit of divergence on the Williams %R reading. Does that guarantee a bounce is coming?
Of course not.
While there are signs of a possible bounce, we need confirmation and that comes through rotation.
What I would love to see here is a rotation over last week’s high at $60.34. That gives us all of the observations above plus a weekly-up rotation. That could put the 10-week moving average in play, currently near $69.
On the flip side, the risk is that PINS stock gives us a weekly-down rotation below $53.94, potentially putting more downside in play.