Before buying into any trade, always check out the technicals.

For example, we mentioned C3 AI (AI) and how it was becoming one of the hottest tech stocks on the market.  All thanks, in large part, to the ChatGPT momentum.  But all we had to do was look at a one-year chart to see just how overbought the stock became.

At the time, we also noted, “Even with all of the bullish commentary, we’d wait to buy C3.ai. That’s because the stock is technically overbought after running from $10 to $25.88 in days. Not only does it appear to be topping out for the immediate term, but RSI, MACD, and Williams’ %R are all deep in overbought territory.  We’d wait for a pullback to buy.”

While the stock attempted to break higher, it’s starting to correct.

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In fact, after running from about $10 to $30 in just weeks, the stock is down $3 today, as part of a healthy correction. Even now, after the correction, we wouldn’t be too quick to buy.  We want to first wait to see where AI stops falling, and then wait to see if it’s supported.

Sincerely,

Ian Cooper