How many vampires did you see last week?
Halloween is gaining traction in Singapore, with many youths and adults dressing up for the weekend.
In the US, the spooky spirit of Halloween spilled over to its stock market. The S&P 500 slid more than 4% in the past two weeks before recovering some ground, shedding 2.7%.
Technology stocks fared worse, with the Nasdaq losing more than 6% in 2 weeks before eventually losing 4.4%.
Is the spooky season over in the US stock market?
I think so.
With this, I’ve unearthed this stock that has shot up by over 33% in 3 weeks.
But before I share my findings with you, let’s review last week’s #PowerStocks pick – Universal Health Services (UHS).
Review Of Last Week’s Pick Of The Week
Universal Health Services (UHS) was last week’s #PowerStocks pick.
It’s a leading healthcare service provider in the world, worth over $13b.
After exploding upwards by 15.8%, its shares began pulling back.
I was anticipating a deeper pullback, but it didn’t happen.
Instead of pulling back deeper to around $210, its shares took off.
Will I be changing my trade plan?
Head over to my Telegram Channel to find out!
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Why Is Swing Trading Cardinal Health (CAH) Worth It?
Source: cardinalhealth.com
Cardinal Health ranks as the world’s 9th largest healthcare company, worth nearly $50b.
Enjoying such a huge market capitalization hasn’t hindered its share price movement. Its shares have consistently burst upwards, bringing enormous returns.
Over the past 11 months, its shares have burst upwards 19 times, with each upmove ranging from 4.2% to 33.5%.
Having risen by 33.5% in just 3 weeks, how do I plan to buy its shares?
Where’s a favorable price area to buy its shares at?
Continue reading to get the details.
P.S. What if I told you that you could drastically gain control over your emotions of fear and greed, and master the stock market in a short amount of time?
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Click on the banner below to claim your stock course for free (limited time) now!
Performance Of US Stock Market vs Cardinal Health (CAH)
What’s the 1st thing I’d like to analyze from the chart above?
The price trend of the shares of Cardinal Health.
Knowing the trend of its shares allows me to determine whether I’d look for a buying or shorting opportunity because following its price trend will sharply increase my chances of profitability.
Can you tell that the shares of Cardinal Health are in a steady and strong uptrend? Therefore, I’d like to find a buying opportunity.
What’s the next step?
I’ll compare the performance of Cardinal Health’s shares against the overall market (aka S&P 500).
A comparison will flesh out the stronger performer. If the S&P 500 is the stronger performer, then I wouldn’t want to waste my time and money on Cardinal Health’s shares, as I’m aiming for an outsized return.
So, let’s refer to the comparison chart again.
The S&P 500 has been underperforming when compared to the performance of Cardinal Health’s shares.
Here are the statistics:
In the past 3 months, the S&P 500 has risen by 6.1% while the share price of Cardinal Health has shot up by 32.7%, outperforming the S&P 500 by over 5x!
Great! I want to buy the shares of Cardinal Health.
But are there more points to consider?
How Explosive Is Cardinal Health (CAH)?
Yes, there are more points to consider before buying its shares for an explosive swing trade.
Since I plan to buy its shares and capitalize on its next upmove, rather than sitting through its fluctuations, my holding period will be around a week or 2. Therefore, I want its shares to have the ability to explode upwards.
Have the shares of Cardinal Health been able to explode upwards consistently?
I was left in awe while marking out its explosive upmoves.
Cardinal Health enjoys a massive market capitalization of almost $50b. Its shares are valued at over $200 each. Yet, its shares have been able to explode upwards 19 times in the past 11 months, with each upmove measuring between 4.2% and 33.5%!
The shares of huge companies are usually more lethargic!
Talking about market capitalization, I love it that Cardinal Health enjoys such a massive market capitalization because this provides an extra layer of security against manipulation. I don’t wish to lose my hard-earned money to manipulation that could be easily prevented!
Here comes the golden question: Is it time to buy the shares of Cardinal Health for an explosive swing trade?
Key Price Levels
As with many things in life, timing matters.
The right thing done at the right time is the best thing that can happen.
Buying any stock at the wrong time can result in significant losses and emotional distress. This will cause you to lose confidence, and you’ll doubt yourself even when a fantastic trading opportunity arises straight from under your nose!
So, is there a way to determine whether the time to buy Cardinal Health’s shares is here?
Yes!
Here’s how I do it – by uncovering the key price levels (also known as support and resistance zones) of Cardinal Health’s shares. And that’s what I’ve done in the chart above.
Having risen 33.5% in 3 weeks, a pullback could be around the corner.
Where is it likely to fall to before bouncing?
I think that this could happen around $191.
Therefore, I’m waiting for the shares of Cardinal Health to pull back a little more to around $191 and bounce before buying them to catch its next explosive upmove.
Here’s a pro tip: Instead of staring at your screen, consider setting a price alert on your broker’s platform to be notified so that you can spend precious time with your loved ones.
Which Instrument Should You Consider Using?
Do you ever wonder about the instrument used to trade explosive stocks?
With 3 main trading instruments available – stocks, contract-for-difference (CFD), and options, you wonder which suits you best.
Since stocks (as an instrument) is easy to understand, I shall focus on CFD and options.
Here are the main similarities and differences:
CFD works like a mirror to stocks. When a stock rises $1, its CFD rises $1.
However, due to its unique pricing mechanism, your options price doesn’t rise by the same amount. In fact, depending on the market conditions, the price of your options contract may even drop!
Your CFD broker will charge you a finance fee for lending you money for your trade. However, no lending is required for options, so there is no finance charge.
Because there’s a finance charge by your CFD broker, CFD is not the ideal instrument for mid to long-term trades. On the other hand, options allow you to implement different strategies across time horizons.
Both CFDs and options are leveraged instruments because they allow you to control a larger market position with a smaller amount of capital.
While CFDs do not have an expiration date, options traders must pay attention to the expiration date of their options contracts.
You must be thinking, “What’s the beauty of trading options?”
Options are like smartphones. You can choose to use a smartphone for its basic or advanced functions.
And options don’t have to be all about Math and dry!
It can be made easy to understand through real-life analogies.
In the same way, you can implement basic and/or highly advanced strategies depending on your level of comfort.
Options allow you to be versatile in adapting to the shifting market conditions and capturing opportunities in the process.
Are you a CFD or options trader?
I’m glad to be fluent in both.
Finally, this is for educational purposes. Please perform your due diligence.
All images are taken from pexels.com, pixabay.com, sectorspdrs.com, tradingview.com, and unsplash.com, unless otherwise mentioned.
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Worse still, ~80% of traders lose money.
This is because trading isn’t just about skill alone.
It includes the mastery of your emotions.
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