These Calls Could Easily Double
After the market reacts to news it has been waiting for, like some easing of the Chinese trade war tensions, I like to let the event day help determine which trading opportunities are the best.
In today’s case, I’ve found a stock that has been setting up to rally regardless of the good news about China.
As a result, I expect it to breakout higher. Read below to see the trade plan.
As you can see in the chart below, Ebay (EBAY), when the market recently retraced, EBAY stopped at the high of the multi-month consolidation.
This is a very bullish breakout and retracement pattern in normal circumstance and even more bullish now.
EBAY’s pattern is not leading the market on a long-term basis, but it is relative to its May swing highs.
Additionally, it is not an extended chart.
As I said above, I like to let the event day determine which trades are the best. I do this by waiting for the market to trade above (bullish) or below (bearish) to confirm my intended trade.
Considering all of the above, the trade set up is simply to be a buyer over 40 with a stop under the recent retracement low. So under 39.80.
If you’re an option trader, you may want to check out the Sept calls. Just about any one of them could easily double in value if EBAY tests its high over the following few weeks.
Rick Nartarian, Chief Investment Officer
Darwin Wealth Creation