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We all know by now that tech has been the hottest sector throughout this COVID-19 pandemic. 

The Nasdaq has been on an absolute tear and just set new highs at 11,129. 

Now, some may argue that tech is due for a correction and that sector rotation may put new names at the forefront. 

But while I’m in favor of being forward looking, I’m also a short-term trader.

I like to play the market— as it is right now. 

One of last month’s biggest knockout wins was Pinterest (PINS), showing gains of 55%.

And given it’s significant gap up after earnings, I think it could be prime for even more momentum. 

It just so happens that a PINS dark pool print came across my scanner two nights ago, so I’m wondering if there’s even more good news in store. 

I want to reveal the setup I’m looking at, as well as what calls activity I’m observing.

 

COVID-19 Has Fueled PINS User Base and Ecommerce Expansion

 

PINS has more than tripled in value since its mid-march lows. 

That’s in large part due to a big pop at the end of July, thanks to blowout earnings results. 

While the revenue of $272.5 million was only 4% higher year over year, it handily exceeded analysts’ expectation of $255 million.

PINS is now trading at around $35 a share, which is just above its IPO price from August of last year. 

Now, that may not sound too good as far as this year’s entire performance.

But I have a few reasons in mind to be bullish about PINS rallying through this resistance level. 

First off, Brian Nowak at Morgan Stanley recently upgraded PINS from equal weight to overweight, meaning he values it at a higher-than-normal percentage for portfolios. 

He thinks shares could go from $34 to $44.

While I’m not trading based directly on his advice, it does signal to me that more top whale street players may be taking an interest. 

That’s exactly what the PINS prints off my dark pools scanner has confirmed. 

It makes sense though. 

Ecommerce and social media trends have caught a huge boost in response to the pandemic, as shoppers have been forced out of brick-and-mortars. 

Pinterest supports that space directly by giving shoppers visual ideas and hosting ads that direct to online retailers.  

Correspondingly, revenues shot up as much as 50% in the most recent month of July. 

And perhaps even more importantly, the number of monthly Pinterest users has increased by 39% to 416 million, an impressive figure. 

106 million of the 116 million monthly active users during that period came from overseas, which means that the company can successfully expand outside the US. 

I think that this could signal more than just an expansion in the Pinterest user base is in the pipeline.

Pinterest itself could move into the ecommerce space by allowing people to open up online stores… 

The company already has a partnership with Shopify (SHOP), which has also been surging over the recent months. 

Ultimately, Pinterest has unique advantages to their platform that even the other social media giants like Facebook have yet to tap into. 

 

PINS Holds Steady After Earnings Pop

 

PINS has been a strong growth stock that has greatly benefitted from the pandemic. 

That was made even more obvious after the significant gap up PINS experienced after earnings. 

But here’s the kicker…

PINS hasn’t pulled back much from that gap up, and therefore it could head higher from here. 

 

I’m looking to see them break back above $36 at which point I’d look at the Sept 18 $40 calls.

I haven’t jumped in yet, but my premium Dark Pools subscribers will be the first to find out if I do. 

If you’re interested in learning more about my dark pools trading strategy, check the dark pools training workshop I just hosted here. 

Author:
Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com podcast where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share some of the wisdom needed to live a successful life.

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