The trade war between the US and China has only just begun.
A few days back, China imposed export restrictions on a range of critical rare earth minerals and magnets.
These rare earth minerals can be found in virtually every electronic and electrical appliance, including speakers, televisions, and motors of electric vehicles.
Medical technologies such as laser surgery and MRI scans, and the defense sector, are also highly reliant on rare earth minerals. This could explain the weakness in the healthcare sector, although it often shines in times of uncertainty.
As the turmoil continues, I’ll continue to play defensive and be on the lookout for strong-performing stocks that are in the defensive sectors.
Last week, I’d shared about Dollar General (DG). How did it fare?
Let’s review it together.
Review Of Last Week’s Pick Of The Week
Dollar General (DG) was last week’s stock pick.
It’s a discount store that sells food, snacks, health and beauty aids, cleaning supplies, basic apparel, and more.
Fear is still in the air due to the unpredictable nature of President Donald Trump and his ongoing trade war with China.
As a defensive stock, did Dollar General’s shares perform as anticipated?
I’d shared that its share price has bounced off its support area beautifully, therefore, I wanted to buy its shares.
The share price of Dollar General rose an eye-catching 6.8% in just 4 days, and I’m loving it.
Where do I plan to take a profit? I’ve shared this in my Telegram Channel.
Speaking of Telegram, 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 Atmos Energy (ATO) Worth It?
Source: atmosenergy.com
Atmos Energy is a Utilities company that provides natural gas services.
Regardless of the economic climate, natural gas is required for daily living. Hence, its shares are more likely to be shielded from the economic uncertainty that’s swirling in the US.
While the S&P 500 sank almost 12% in the last 3 months, Atmos Energy rose 8.3%!
Traders and investors love its shares amid the uncertainty.
I’m eyeing to buy its shares to catch its next burst up.
But is the time here?
Unfortunately, no.
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 Atmos Energy (ATO)
The S&P 500 headed lower as optimism wore off.
What about the share price of Atmos Energy?
From the chart above, can you tell that its share price is in an unstoppable uptrend?
An uptrend indicates that I should look out for buying opportunities, as this would put the odds of success in my favor, thereby increasing my chances of profitability.
However, buying any stock that’s in an uptrend may not be effective. The stock in question ought to outperform the stock market so that I can potentially make a larger-than-market return from buying its shares.
So, let’s refer to the comparison chart above again. Have the shares of Atmos Energy outperformed the S&P 500?
Ever since mid-Feb, it has!
In the last 3 months, the S&P had declined by 11.9% while the share price of Atmos Energy had shot up by 8.3%!
I love such a staggering outperformance.
Are there other factors to consider before I buy this stock for a swing trade?
How Explosive Is Atmos Energy (ATO)?
Absolutely!
A strong-performing stock could be climbing slowly. That wouldn’t be the best use of my trading capital and time.
Hence, I’m going to look at the explosiveness of Atmos Energy’s shares.
However, before I do that, I’d like to find out the market capitalization of Atmos Energy.
Wow! Atmos Energy enjoys a massive market capitalization of over $25b!
This is great because the shares of companies with large market capitalization are much tougher to manipulate, adding a layer of security to my hard-earned money.
With a massive market capitalization, are its shares likely to surge upwards consistently?
Let’s refer to the chart above.
I’ve marked out the explosive upmoves. There are a total of 13 of them!
And each of them measures between 4% and 10.4%!
This excites me.
But before I pull the trigger to buy its shares, is the timing ripe?
Key Price Levels
Losing money is a lousy feeling.
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.
These key price levels are also known as support and resistance.
Where is the support area for the shares of Atmos Energy?
Did you also identify its support area at around $152?
Because the share price of Atmos Energy is likely to return to around $152 before heading higher, I don’t want to buy its shares for an explosive swing trade now.
Instead, I’ll be patiently waiting for its share price to retrace to this price area and bounce before clicking the Buy button.
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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Many new traders are often left confused by conflicting signs and signals.
Worse still, ~80% of traders lose money.
This is because trading isn’t just about skill alone.
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