Anchored VWAP IPO Beyond Meat
Anchored VWAP IPO Beyond Meat
Anchored VWAP IPO Beyond Meat
With a defined starting point to anchor a VWAP from, an IPO offers the
purest look at supply and demand from a fixed starting point shared by
all participants.
As famed market timer, WD Gann once said: “if you know the ‘zero-
point’ you can measure anything.”
The next few charts will use AVWAP analysis in shares of Beyond Meat
(BYND) from the first day as a publicly traded company.
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On the third day of trading (May 6) in BYND, the stock opened (circle
above) at the AVWAP from the IPO and immediately found buyers. The
chart above uses 5-minute candles so the action can be cleanly viewed.
Always try to use as short a timeframe as possible without the chart
getting “scrunched up” and difficult to see any real detail.
.
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This final chart of BYND from 11/22 shows several important events.
Starting with the blue IPO AVWAP in May (1) you can see that prior to
the large breakdown in October, there were three (circled) times when
prices dropped below the IPO AVWAP. The first (1A) and second (1B)
breaks occurred when the AVWAP was still rising, which gave us a
reason for caution but not to get bearish. The third (1C) break occurred
in late September and this time the AVWAP had flattened out, which is
a real reason for concern. The purple AVWAP (2) was anchored after
the large gap in June. Initially, this AVWAP provided little value as
prices oscillated above and below it. After prices closed below the June
AVWAP (2A), notice how it then acted as resistance in late August (2B),
this was a real danger sign as the average participant from the June gap
was losing money and the average short was now in a profitable
position. Once AVWAP (2) acted as resistance, it was safe to anchor a
third VWAP (3) from the prior peak. Prices stayed below this AVWAP
through the end of the time studied. The black (4) VWAP was anchored
from the September gap. Notice how quickly this gap failed and then
AVWAP 4 acted as resistance during the October decline. The final (5)
VWAP is anchored from the October gap down. With the stock below
all of the declining AVWAPs, this stock is clearly controlled by sellers and
buyers will have a lot of work to do to regain the upper hand.
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