Don here...
Blake just identified nine tech stocks that literally can't cover their fixed expenses with current earnings.
Not speculative expenses. Not future growth costs. Their basic rent, leases, and debt payments.
The ratio he's using is brutal in its simplicity: EBIT plus fixed charges divided by fixed charges and interest. When it drops below zero, you've got a company burning through cash just to keep the lights on.
Here's the list that showed up on his screen:
-
Snowflake
-
Cloudflare
-
Unity Software
-
CrowdStrike
-
Intel
-
Datadog
-
Take-Two Interactive
-
Roku
-
NET
Blake's thesis is straightforward. If tech is topping here—and the XLK chart suggests we are—these financially weak names will get crushed first.
The setup looks clean. We're seeing exhaustion gaps. Gap up, close down. Gap up, close down. Classic distribution pattern at the highs.
Unity Software is already in a confirmed downtrend. Lower highs, lower lows, broke support twice. Blake sees it dropping to $32.50, potentially filling the gap at $29. That's 10% minimum.
CrowdStrike broke the three-week low intraday. If it closes below that level and heads to Blake's target of $410, you're looking at a 20% drop from current levels.
Take-Two Interactive has 80th percentile implied volatility. That means you can sell call spreads and collect fat premiums betting these stocks don't reclaim their highs.
Blake walked through the exact structure: Sell deltas around 42, buy the next strike out, collect 30-33 cents per dollar wide. The math gives you a statistical edge when these companies are already showing they can't meet basic obligations.
The fixed coverage charge ratio doesn't lie. These companies know exactly what they owe every single month. When they can't generate enough earnings to cover those known expenses, the market eventually catches up.
π Click here to watch Blake break down the exact trades and chart setups
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
P.S. Join Blake tomorrow at 2 PM EST where he reveals his Free LIVE Dark Wire system Training.
See why traders are calling it a game-changer.
Grab your seat here.
No comments:
Post a Comment