How We Left Axon Stock With Profits Before The Market Shock

As investors, we're always on the lookout for opportunities to capitalize on market trends and make profitable decisions. In the case of Axon Enterprise (AXON), we managed to exit the stock position with profits before the market took a turn for the worse. Here's how we navigated the situation and what we learned from it.



Initially, we entered the Axon stock position based on strong technical indicators and chart patterns. The stock broke above its 50-day moving average line with power, and after a brief pullback, it popped above $670 following three days of getting turned away at that level. This bullish setup suggested a strong breakout, and we joined the trade accordingly.

However, we quickly exited the position when the stock didn't follow up the next day, as it appeared to be a little extended from its lows of the base. Our assessment was that the stock needed to add a handle before continuing its upward trend.

Later, we reentered the position on an upside reversal, which was an even more compelling setup. Axon saw a wide spread, found support at its 21-day line, and then had a powerful move with a close near its peak. This setup was very strong, and we took a portion of the position into strength as a risk management strategy.

The next day, however, high-valuation growth names started to see some cracks, and Axon was close to patient zero. A downgrade by Northcoast Research analyst Keith Hosum started the move down, and as the selling accelerated, we exited the position at around $673, just 30 minutes into the trading session. This quick exit decision allowed us to leave the trade with a gain of roughly 1.5% and avoid an even sharper downturn.

Looking back at the situation, we can see that the analyst downgrade and the termination of the partnership with Flock Safety significantly impacted Axon's competitive position and market leadership. Flock, which Axon previously invested in, has since grown and now operates as a direct competitor in key markets, including automated license plate readers (ALPR), drone technology, and real-time crime centers. This unexpected competition raised questions about Axon's market leadership and may have temporarily diverted the company's focus from maintaining its dominant position.

To mitigate these challenges, Axon could consider strengthening its core competencies, diversifying partnerships, expanding into new markets, improving communication and customer engagement, and closely monitoring market trends and customer needs. By implementing these strategic moves, Axon can maintain its competitive position and market leadership in the face of increased competition.

In conclusion, our experience with Axon stock serves as a reminder that even the most promising setups can face unexpected challenges. By staying vigilant, adapting to market conditions, and employing risk management strategies, investors can navigate these challenges and make profitable decisions. The key takeaways from this experience are:

1. Always be prepared to exit a position, even if it means leaving some profits on the table.
2. Keep an eye on broader market trends and be ready to adapt your strategy accordingly.
3. Stay informed about company-specific developments and how they may impact the stock's performance.
4. Maintain a balanced perspective, acknowledging both risks and opportunities in the market.

By following these principles, investors can make more informed decisions and better navigate the ever-changing market landscape.