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Rising Costs at Rivian Motors and An Overbought Story for NASDAQ:RIVN by kryptoniteresearch

Intro: Near Term Post ER Price Action

The reaction to the earnings report has been mixed. The overall index for the market has been floating higher and higher. Just this past Friday we saw a surge in stocks that led the $SPY higher by more than 1.5%, strongly led by tech and names such as Tesla . However, $RIVN seems to have been left behind by the market. It was left to close at nearly flat after flirting with both positive and negative gains for the day.

What does this mean? To me, it means that traders are split after the earnings report and having a re-think on the story. The size of the loss is proving harder to digest for some investors while others are still encouraged by the reaffirmed production forecast. Some, it seems, feel that they’ve gained enough and are taking risk off while Rivian works out these production issues would be my guess. There are safer places to put money after all than on a company that has tripled its expected loss.

For the stock price itself, in physical terms, this means that there is a new force pushing down on the stock’s price from above. This force, we already know, is rising costs and it is strong enough to put the bulls into a timeout. If this force remains in place, then short term bulls who are making trades–not investments–may not be happy with a stock that is no longer rising. They may, in fact, take their gains and sell out of the stock. We can see on the chart that the $40 a share price point represents significant resistance overhead. If it fails to move above it and turn that resistance into support, then it could end up getting sold down to $32 a share–potentially. Nothing is certain, but the possibility is out there.

As far as the charting goes, I believe we’re looking at the start of a roll over (highlighted in yellow circles) as the stock starts to give back some of it’s price. Momentum has started to shift from a very crowded bull trade, to one with just a few fewer bulls, and the entry of the bears. I expect this to take a few months to get digested.

Read my full thoughts below:

https://kryptoniteresearch.com/rivian/

As always, please consult the appropriate professionals for any financial decisions. I am not a professional. These are my own personal opinions that I’ve expressed regarding the market and the companies mentioned above. I am not responsible for any decision, trade, or investment you may make. I am a retail trader just expressing my personal thoughts.

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