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Fan Yang

Snap Inc. (SNAP) CFO Departure Prompts Bearish Continuation Breakout

Snap Inc. $SNAP, the company behind Snapchat, continues to fall in its market cap after CFO, Tim Stone, announced his departure during the morning of the 1/16 session. Tim Stone was with Amazon, but left to join Snapchat in May 2018. According to Forbes " Snap's 8-K filing with the SEC noted that he will stay with the company through the report of fourth quarter results, scheduled for February 5th, but his short stint as CFO clearly raises questions." (Forbes.com).

SNAP Daily Chart

(click to enlarge)

Bearish Continuation:
- As we can see on the daily chart, SNAP has been on the decline throughout 2018. 
- It should be noted that price has been in a general downtrend since the IPO at $14.06. There was an initial jolt to over $17 a share, but the price in those early days would be remain the historic-high. 
- More recently, price bounced off of $5.00 and pushed above $6.00. 
- Price even cracked a falling trendline.
- The timing coincided with the general market recovery, so we should attribute this rally to overall market risk instead of company-specific-factors. 
- Today's (1/16) dip brought price below the falling trendline. 
- SNAP also broke below the recent flag pattern that has been developing during the market recovery. 
- Furthermore, the RSI held under 60, which is a sign that bearish momentum is intact. 
- These are signs that bears are still in control of this market, and we should expect price to retest the lows around $5.00.
- If price does indeed reach the lows, we should not rely on support again, outside of maybe a very short-term bounce.
- I can't think of a reason to buy SNAP any time soon, except to gamble on a miraculous pivot from becoming irrelevant. 
- I think short-term traders will instead consider shorting on a rally back to the $6.00-$6.20 area. 
 

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