• tlivingstonblog

Square Showing Potential

While in South Beach in 2015, a friend and I ventured into a small convenience store to grab a drink to quench our thirst from the hot Miami heat. When I went to purchase my drink, I noticed the cashier using a little reader attached to an iPad to take my credit card payment. While I did not trade it at that point, I was intrigued by the possibilities Square was opening up. Since then, not only has Square become a dominant player in the payment sector, it also may be revolutionizing small-business banking.

Square has been producing consistently strong earnings and sales, particularly last quarter when it announced triple-digit earnings and sales growth. Recently, CEO Jack Dorsey announced that Square will be using bitcoin to decentralize financial services. The idea is for Square to become a bank for small businesses and potentially become "the bank of the future."

SQ was a big winner coming out of the 2020 bear market. After more than tripling from $80 to $270, SQ has been consolidating in a very large base throughout most of 2021. This is very similar to what we have been seeing recently with SNAP, CRWD, SHOP, and ROKU. While looking at Square's chart, a few things caught my eye. First, I like the large double bottom base that is forming on the weekly chart. The second low undercut major support around the 200-day moving average as well as the $200 price level. This effectively shook out weak hands as stops were hit once logical support areas were breached. In addition, there has been some constructive action near the $240 range with the 10-week and 40-week moving averages starting to turn up. I took a partial position in Square this week and am planning to polish out a full position if I can get another entry point at a higher price level. As always, I have a stop loss in place to protect myself should the trade turn against me.

To learn more about swing trading, the stock market, and cryptocurrency trading, visit my course page.

Full Disclosure: I currently own Square.


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