Do you think that the US and China are already in trade talks?
China has refuted the US’s claims that they’ve been speaking.
A few days ago, it was announced that both countries are considering holding trade talks. This sent global stock markets soaring, and many cheering.
Are you enjoying this bullish move in the US stock market?
Last week, I’d shifted my attention away from defensive stocks to cyclical stocks. More specifically, this technology stock, CrowdStrike (CRWD).
How did it fare?
Let’s review it together.
Review Of Last Week’s Pick Of The Week
CrowdStrike was last week’s stock pick.
It’s a cybersecurity company in the Technology sector.
The tariffs imposed by President Trump had negatively impacted most stocks, and the shares of CrowdStrike weren’t spared.
In a twist of events in the White House, its shares have recovered and continue to head higher. Because of this strength, I’ve shortlisted this stock, waiting for a pullback.
A pullback came, but it was much shallower than expected. The shares of CrowdStrike had run away, so I’ll be dropping this trade idea.
Switching to another important topic. I’ve been alerted about Telegram groups impersonating me or Swim Trading.
Please note that my team and I will never ask you for your hard-earned money for “investments”.
I know and understand that the allure of high returns without effort is highly attractive. It breaks my heart when I hear of people falling for impersonation scams.
To protect you from scams, please note that my team and I WILL NEVER solicit for any investment.
A list of our official communication channels can be found here.
Why Is Swing Trading Zscaler (ZS) Worth It?
Source: zscaler.com
Zscaler, like CrowdStrike, is a cybersecurity company. Therefore, it belongs to the Technology sector.
It has received rave reviews and has the biggest names in the world as its partners.
A look at its share price over the years is heartening, with new 52-week highs formed every day in the past week!
Sadly, the same cannot be said of the S&P 500. Over the past 3 months, the S&P 500 was badly rocked. It slid 5.8%.
In contrast, the share price of Zscaler rose powerfully by more than 13%! Such an outperformance is welcomed, and I’m excited by this stock.
But I’m not going to buy its shares at its current price.
What’s the price area I’m waiting for?
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 Zscaler (ZS)
Did the tariffs and trade war affect the share price of Zscaler?
Its share price dropped sharply when the tariffs were announced in early April. But, its recovery was as swift!
Optimism overshadowed the risks ahead, propelling its share price to form multiple 52-week highs.
Its powerful uptrend tells me 1 thing – I should look for a buying opportunity because this will increase my chances of success.
Is there more that can be easily done to increase my chances of success further?
Yes!
By ensuring that the performance of Zscaler’s shares is stronger than that of the market. This can be done by referring to the comparison chart above.
As the stock market recovers from its devastating drop, it is still down 5.8% in the last 3 months.
What about the share performance of Zscaler?
Its performance has been outstanding, rising 13.7% in the last 3 months!
From this quick and simple analysis, Zscaler looks like a great candidate for a swing (short-term) trade.
Are there more to analyze?
There certainly is!
How Explosive Is Zscaler (ZS)?
Remembering my goal in mind – buying the shares of Zscaler for a few days to profit from its short burst upwards in price, I want to know whether the shares of Zscaler have proven to be explosive.
So, I’ve marked out the upward moves Zscaler’s shares have made in the past 11 months.
Do I like what I see?
In the last 11 months, its share price has burst upwards 16 times!
Better yet, each of its upmoves measures between 5% and 28.9%!
This is even more remarkable when I took a look at its market capitalization. Zscaler enjoys a huge market capitalization of over $35b.
To enjoy such explosive upmoves with a huge market capitalization is mind-blowing.
There’s another reason for knowing its market capitalization. A company with a large market capitalization makes its shares much tougher to manipulate, protecting my hard-earned trading capital.
Great!
Will I be buying its shares when the market opens on Mon?
Should I?
Key Price Levels
No one likes losing. Especially money.
How should I decide whether the time is here to buy its shares for an explosive swing trade?
I’ll uncover its key price levels (aka support and resistance zones) to help me decide.
Marking out a support zone at around $224, I think that Zscaler’s share price is likely to pull back to this price area before rising higher once again.
After more than a decade of trading the US stock market, I’ve realized the need to be disciplined. Instead of chasing stocks, I’d wait for the stock’s price to reach the key price levels I have in mind.
Hence, I’ll wait at this price area before buying its shares for an explosive swing trade.
This approach has saved my students and I from countless heartaches.
Here’s a pro tip: Instead of staring at your screen, you may want to set 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.
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