The March school holidays are over?!
I’d enjoyed more time with my daughter last week, bringing her out for meals, visiting the Science Centre, playgrounds, and other outings. I hope that the feeling is mutual.
Should school holidays be a little longer?
On the contrary, what’s 1 thing that should be shorter?
Yes, conflict. I hope that all parties involved in this war in the Middle East will come together to thrash things out as soon as possible.
Let’s not take peace for granted.
As the war rages on, the US stock market has suffered a hit. The S&P 500 has slid over 7%. WTI and Brent crude oil have risen almost 50% to reach $98 and $109, respectively.
Given that the war isn’t likely to stop soon, stocks may continue to fall. Are there swing trading opportunities in a falling market?
Thankfully, there are! And, I’ve found 1 potential trading idea.
Before I analyze this week’s stock pick, let’s review last week’s #PowerStocks pick: Evergy (EVRG).
Review Of Last Week’s Pick Of The Week
Evergy (EVRG) was last week’s #PowerStocks pick.
It’s the world’s 35th largest utilities company, supplying electricity to homes, offices, factories, eateries, and more.
Evergy’s shares rose and broke out of their resistance area around $82.70 as anticipated.
Unfortunately, its shares skidded off after. Do I plan to hold onto this trade?
Head over to my Telegram Channel to find out!
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To protect you from scams, please note that my team and I WILL NEVER solicit for any investment.
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Why Is Swing Trading Performance Food Group (PFGC) Worth It?
Source: pfgc.com
Performance Food Group (PFGC) is a food distributor in the US and Canada. The company supplies food and food-related products to restaurants, vending machines, cinemas, and more.
With its expertise, the company is valued at more than $12b, ranking it among the world’s 40 largest food companies.
Unlike many large companies whose shares exhibit lethargic price movement, its shares are highly active, consistently making big moves.
Over the last 10 days, its shares have slid 9.1%. I don’t think it’d be wise to short its shares now.
What’s my game plan?
Where’s a favorable price area to short 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?
My team and I have worked tirelessly to help you achieve results fast.
Click on the banner below to claim your stock course for free (limited time) now!
Performance Of US Stock Market vs Performance Food Group (PFGC)
The very 1st thing I want to know is the trend of Performance Food Group’s shares.
Knowing the trend of its shares (in blue) 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.
Looking at the chart above, its shares are in a strong and mighty downtrend. Hence, I’d like to find an opportunity to short its shares.
What’s next?
I’ll compare the performance of its shares against the S&P 500.
Why?
I want my hard-earned money to work hard for me. A weaker-performing stock is likely to continue to slide further, bringing a larger-than-market return. So, I’ll have a look at the comparison chart above again.
While the S&P 500 has dropped 5.3% over the past 3 months, the shares of Performance Food Group have slid over 15.4%! That’s close to a 3x underperformance!
I’m excited. I can’t wait to short its shares for an explosive swing trade.
Should I do just that now?
How Explosive Is Performance Food Group (PFGC)?
No, I shouldn’t rush to buy its shares without a deeper analysis.
Since I plan to short its shares and capitalize on its next downmove rather than accompanying it when it pulls back, my holding period will be around a week or 2. Therefore, I want its shares to have the ability to explode downwards.
Have the shares of Performance Food Group been able to explode downwards consistently?
Marking out the explosive downmoves for the past 11 months has left me stunned.
There are 19 explosive downmoves, with each measuring between 4.8% and 16.1%!
I got more excited when I discovered the size of Performance Food Group.
This company enjoys a large market capitalization of over $12b! It’s no easy feat for the shares of such a company to explode in price consistently.
Additionally, I appreciate that Performance Food Group enjoys a market capitalization of over $12b, as 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 short the shares of Performance Food Group for an explosive swing trade?
Key Price Levels
Timing is crucial for many things in life. This includes stock trading and investing.
Shorting an explosive 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!
Is there a way to tell whether the time to short the shares of Performance Food Group is here?
Fortunately, yes!
You can do so by uncovering its key price levels (also known as support and resistance zones). And that’s what I’ve done in the chart above.
After sliding by more than 9% in 10 days, I think that its shares could be pulling back soon.
Where do I think its shares are likely to pull back to before resuming their slide?
I think Performance Food Group’s shares could pull back to their resistance area around $85 soon.
But I’m not going to short its shares once they reach $85. Instead, I’ll be waiting for a bounce lower before shorting its shares to catch its next explosive downmove.
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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