I don't trade Chinese stocks often. But when I do, I most definitely define my risks up front. I don't want to be the next person to become "UnLuckin'd", if you know what I mean...
With that in mind, there's a chinese stock that showed up on our recent Under the Hood report that has caught my interest for a tactical play.
Well well well... markets go in both directions. Who knew??
I jest of course, but man it was starting to feel like the market will only go up forever. And naturally, when market participants start feeling that way and then they are suddenly hit with a small dose of reality, those of us caught leaning the wrong way tend to panic.
But the panic always recedes as cooler heads prevail and realize that they may have overreacted. This is the bet I'm willing to make right now with today's trade.
So is this two-day selloff a start of something new? Or is this a gift from the Pullback Gods to get into those longs positions you were FOMO-ing about?
One of the names that stood out for me in the latest Under the Hood report, was unsuspecting. These days I expect the names that are popping up there to be the sexy tech high flyers and/or cheaper low cap speculative names. But a certain name with a pretty popular cheerleader caught my attention.
A semiconductor name that we got into a few weeks back stopped us out, and that sucked. But the beauty of honoring stop losses and stepping aside is that it allows us to gain fresh perspectives on new setups.
Armed with this new perspective, as well as seeing the stock show up in a recent Under the Hood report has me ready to test the waters again.
It is undeniable that the current market environment is rapidly weeding out companies that cannot survive in a digital world, and handsomely rewarding those that can.
And it isn't always the super high tech, VC-backed, trendy startup company that benefits. There are plenty of "old-school" names positioning themselves for the new reality of commerce in our new world. Thankfully, we don't need to be "futurists" who can predict the future of social, economic, and government trends. All we need to do is keep a careful eye on where investors are allocating capital and the resulting price action tells us everything we need to know.
Our trade idea today is in one of those old school retailers that's reinventing itself in new school ways.
As the U.S. continues to deal with the Coronavirus situation, it makes sense that stocks in the healthcare space should be doing well. There's a lot of attention and investment happening here to help deal with the calamity and prevent future spread.
Of course, as traders we don't need to read the headlines to know this. Following price and charts tells us everything we need to know.
One of our favorite names in the space is setting up nicely and it's time for us to get involved.
The team published a piece last week highlighting a bunch of setups in the Natural Gas space. A few of these stocks are already pretty extended due to recent moves, but I've found that one of them still has a lot of meat left on the bone and we can get into it with some cheap call options.
