Coming into Monday, Snap stock was riding a four-day win streak with shares up 15.9% in that span. It was up in seven of the previous nine sessions before today.
Bulls aren't cheering on Monday though, with the stock down close to 4% at its low.
That said, Snap’s been the best-performing social media stock lately. Shares are up 12% in the past month, besting the next best performer — Twitter (TWTR) - Get Twitter, Inc. Report — and its 5% return.
The outperformance isn’t limited to the last 30 days. It includes the last three-month, six-month, one-year, three-year and five-year periods. Wow.
So far this year, Snap is up 60%. Facebook is the next best performer, up almost 30% on the year.
Because of this strength, I want to be a buyer of Snap on the dip, as the stock just hit all-time highs last week.
Trading Snap Stock
In July, Snap stock gapped higher on better-than-expected earnings. The news sent the stock to all-time highs and broke it out over resistance.
On a bullish reaction to earnings, I was looking for a potential move to new highs, followed by a run to the 138.2% extension, near $83.
While we got the move to new highs, it took almost two months for Snap to reach that extension level, which it did on Friday. Retreating from this measure now, the bulls aren’t necessarily done.
I would love to get a buy-the-dip opportunity at $78. Despite a few temporary pushes above this mark, this level has mostly acted as resistance since Snap’s post-earnings gap higher.
The 10-day moving average also comes into play near this level. A break of $78 puts the 21-day moving average in play, as well as the backside of prior downtrend resistance.
On the upside, clearing the $83 level opens the door to the $88 to $89 area, where the stock finds the 161.8% extension.
The buy-the-dip setup may not materialize or support may not come into play, but it’s at least an attractive risk/reward opportunity if it does come to fruition.