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Dropbox Creates F.O.M.O., Teaches a Key Technical Analysis Lesson

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Dropbox (DBX) is making a huge move today.

Let’s reverse engineer the rally.

On Wednesday, I said this in my Morning Note:

“DBX has had many false starts. We’ll see if this one is better. Bulls want it to continue above $31 and hold that level.”

That $31 level was Tuesday’s high, as you can see on this chart:

..

It managed to get above $31, touching $31.90. That made $34 - the IPO reaction high -- a big spot to watch.

And today, I said :

DBX was on the stronger side again yesterday. It had a decent Day #1 Tuesday and cleared $31 yesterday. There’s a big base, and if it can clear $31.90, there could be a real move to the post-IPO highs near $34.83.

Now let’s look at the “After” chart:

As you can see, DBX cut thorough $31 like a knife through butter on Wednesday.

And today, it gapped above the descending trendline to pass the post-IPO highs near $34.83. As i write this, it’s over $36.

The lesson: keep an eye on post-IPO highs and lows. They are very important pivots for judging action, and sometimes signal follow-through because they create F.O.M.O. (Fear of Missing Out) for traders that worry about getting left behind.

P.S. For the first time ever, Scott’s teaching his unique method of game planning that could be your answer to trading frustration.

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