Best Stock Trading Approach During Weak Market Months
This August, we’ve been waking up to daily tariff surprises, daily currency volatility, and stocks that are moving up and down in rapid fashion.
What’s the best tactical trading approach during a weak month like this?
Isolate companies that you like – those that have business models that are not affected by the root cause of the market volatility – and look to accumulate them on pullbacks to key support levels.
This is exactly what I’d like to do with PayPal (Nasdaq: PYPL) today…
As you know, PayPal operates as a technology platform that facilitates digital and mobile payments on behalf of consumers and merchants worldwide. These platforms include PayPal, PayPal Credit, Braintree, Venmo, Xoom and iZettle.
Looking specifically at Venmo, the company’s transaction volume jumped 70% year over year to $24 billion – and it’s now accepted by companies like Uber, Hulu, Grubhub and Shopify.
In the big picture, PayPal’s second quarter revenue rose 12% year over year to $4.31 billion, and its active customer accounts increased 17% year over year to 286 million.
So why is the stock down from $120 in late July to current prices around $104?
First, PayPal reduced its 2019 full-year revenue targets. The company expects revenues of $17.6 billion to $17.8 billion for 2019, down from the previous range of $17.85 billion to $18.1 billion.
Second, on July 29, Guggenheim Securities downgraded PayPal, saying that the company receives 11% of its revenues from the United Kingdom, which is headed for Brexit and a dented economy.
You can see how PayPal has reacted to these two triggers…
Action Plan: When will the selling end? Well, let’s refer to the chart. Back in March, PayPal tested the $100 support level on two occasions – and then used it to launch up past $112.50 in April before taking a breather.
If this August pullback we’re seeing now retests this $100 level, I’d recommend adding shares of PayPal on the cheap.
Do you want to learn how to pick up on these trends in real time? Then join us in The War Room today!
About Bryan Bottarelli
Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.