Hood Looks Like Schwab In 1998

Robin Hood (HOOD) has been a hot stock over the past few months. It held up incredibly well during the April market meltdown, and then went on an amazing run. This makes sense given that Robin Hood has revolutionized trading. First, they introduced commission-free trading a few years ago which allowed them to gain many new users, especially those of the younger generation. In addition, they recently began using Tokenization to allow European users to trade blockchain-based "tokens" that mirror the value of an underlying stock or ETF. Third, Robin Hood has also introduced 24 hour trading for five days a week, with plans to expand this to 24/7. These are all things many users want and thus it makes sense that Robin Hood has gone on such a historic run being that it revolutionizing trading.

This all reminds me of Charles Schwab in the late 1990s. My brother is ten years old than me and remarked once that in the early 1990s he used to have to call a broker to find out stock quotes and he was limited to how many quotes he could get in a day. This all seems laughable to us now, but it was just the way things were before the internet. The advent of the internet brought about massive changes, especially for traders. Things we take for granted now such as real-time quotes, charting software, and low commission prices all were ushered in during the late 1990s. Charles Schwab was a big innovator at this time, allowing users to purchase stocks online for much lower commission fees. After the 1998 bear market, SCHW shot up like a rocket ship. After doubling, it pulled back to its' ten week moving average before going on a climax run.

When we put the charts of HOOD and SCHW side by side, it is easy to see the similarities. This makes sense given that both stocks used new technology to revolutionize trading. Both held up well during sharp market corrections. Both exploded higher once market conditions improved. Both corrected to their 10-week moving averages after doubling in price. Now, HOOD is setting up in a high-tight flag. If history repeats itself, it will go on a strong climax run just like Schwab did in early 1999. Time will tell if Robin Hood plays out like Schwab did in the 1990s. I currently own HOOD with a stop loss in place to limit my risk.

Risk right. Sit tight.

Full Disclosure: I currently own HOOD.

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