How To Use Trade Tensions To Find Great Trades

Stocks are under pressure again from trade tensions with China.

As I’ve been saying, the market is in a precarious pattern, so this is not the time to buy a weak day.

However, the market weakness will create good opportunities, like today’s trade idea.

As you can see from the chart below Twitter (TWTR), had a very strong day on good volume yesterday.

Also take note that it recently tested the support level of $37 and has rallied off of it.

If the market sells off and TWTR holds above 37, then its next attempt to move higher will setup a buying opportunity with a stop below the recent swing low, $36.37.

An example of how this scenario may play out looks like this. The market is lower today. If TWTR hold above $37, then today’s high will be the level to use as a trigger for a buy entry when it is broken.

The stop will be under $36.

As you can see, this is not a trade that can happen today. We need to wait to let TWTR demonstrate that it has more bullish support than the market.

Additionally, the trade will have a better probability if you are able to enter it on a day when the market is rallying.

Be patient and picky in this market. There are new ideas every day. If a trade doesn’t line up as we want it to, then pass on it.  

Trade smart,

Rick Nartarian, Chief Investment Officer
The American Investor Daily