Whenever Nasdaq (QQQ) sells off, looking like a bubble bursting, it rallies. In 2023, every drop found support at the 20-day simple moving average. It could end at any time.
Neither traders nor investors may predict when the bubble bursts. Those who protect their profits by selling at high prices will fare better. Two stocks that showed a strong sell signal are Upstart Holdings (UPST), an AI-driven lender, and Lemonade (LMND), an online insurance firm.
Both firms tout automation as a business differentiator in the lending business. Unfortunately, lending is the core business for profit margins. Any AI solution may cut costs, giving them an edge over traditional lenders. However, such systems will not give Upstart or Lemonade enough of an advantage to justify their share price.
UPST stock has a short float of 35.08% or a ratio of 2.88%. Bears are confident that the stock will revisit multiple bottoms at below $12.00.
LMND stock has a 28.5% short float. The insurance firm will have trouble attracting investors. Giant insurance firms like Chubb (CB) and Prudential (PRU) pay a dividend. Yet they are trading down YTD.
Take profits in UPST and LMND stock. In addition, Chubb and Prudential do not look attractive, either.
