How The Inevitable Lucid Motors Bounce Will Play Out


Update 6/14/2021: Scenario 2 is expected to play out in July, as the merger has been pushed back a month!

The Churchill Capital Corp IV ($CCIV) merged with Lucid Motors ($LCID) two weeks ago via a SPAC. After it was announced, the stock went into "sell the news mode". Which is typical for stocks that behave parabolically. The pattern plays out like this: a stock goes parabolic, comes crashing down, finally, after some period it continues higher. This pattern happens over and over, whether it is with Bitcoin ($BTC), Tesla ($TSLA), Virgin Galatic ($SPCE), and FuboTV ($FUBO). Within no time the stock will attempt to reach previous highs (any day to up to 2 months from now). So far it has already has pulled back over 65% from its highs since the merger.  Remember, the harder the fall the stronger the bounce. In this article, I will lay out the bullish case for Lucid Motors, and why I think it's a great trade technically speaking.

The Bounce

As it has been two weeks since Lucid Motor has crashed, the stock has attempted to base out, as it attempts to digest the recent insane movements.  In the chart above, I have outlined two bullish bounce scenarios that I believe have an equal probability of playing out. Make sure to take a look at the chart as I have added a lot of details.

In the first bullish scenario, as the stock continues to base, it is likely a shock news announcement will cause the stock to skyrocket very violently and very fast. Such an announcement could range from numerous events such as new technology unveils, faster than expected delivery, or new investors.

In the second bullish scenario, once the stock is done consolidating in its base it will slowly break out and grind towards $65. This scenario will likely play out if there is a known catalyst event. In this scenario, the stock will break out well in advance of the event and grind towards it. This scenario can also play out if current Market conditions also improve with no need for a known catalyst.

In both scenarios, I believe there will be at minimum a 1-day bounce of at least 30% (the stock was just oversold too hard, it will come). Note, there is a high probability the stock may drift lower, if so expect support from the 50 moving day average and the lower Bollinger Band.  

Conclusion

Always remember parabolic stocks always pull back, rest then continue higher (excluding companies that are surrounded by controversy/fraud)! This is how money is made. Lucid Motors ($CCIV) is no different. The more it pulls back the better risk-reward this stock is, as long term the stock is bullish.  I'd advise those that can stomach the risk and volatility to be patient. I have yet to accumulate a full position but I will let my readers and followers know.

Now, for a couple of warnings, I'm relatively new to SPACs, I don't know how these stocks react long term (many of us don't), so, therefore, this is really a medium-term play, where when it bounces it's going to bounce hard and I will likely sell after that. If you wanna see my latest stock holdings and watch list I update it on this page. On my last swing trade, I sold selling Virgin Galatic ($SPCE) for a 200% gain. Make sure to follow me on Twitter, as I tweet additional buy entries.



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