Can you guess what President Trump’s hobby is?
Nope, it isn’t golf.
It is…
Flipping Roti Pratas.
One day, he’s slapping tariffs on imported goods from Country A, and the next day, he’s pausing the tariffs. Then he’s back at resuming the tariffs.
He’s making the world spin with a headache.
As the US stock market continued to take a hit last week, I’d pointed out that stocks in the defensive sectors are bullish. These sectors include Consumer Staples, Healthcare, and Utilities.
I think these sectors will likely continue flourishing in the near future, so this week’s pick belongs in 1 the defensive sectors.
But before I share about this week’s #PowerStocks pick, let’s review last week’s: Brown & Brown (BRO).
Review Of Last Week’s Pick Of The Week
Brown & Brown (BRO) was last week’s stock pick.
It’s an insurance company that’s rising and outperforming the S&P 500.
After sharing this stock, it climbed a little before pulling back as anticipated. This is on the back of a market dump.
The time to buy its shares for an explosive swing trade is near as it approaches its support area, and I’m rubbing my hands in excitement.
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.
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Why Is Swing Trading Colgate-Palmolive (CL) Worth It?
Source: colgatepalmolive.com.sg
Colgate-Palmolive belongs to the Consumer Staples sector. It sells various essential products that we use daily. Thus, it’s a defensive stock.
Defensive stocks are highly favored by the US stock market at this juncture. While the S&P 500 dropped by 1.7% year-to-date, Colgate-Palmolive’s shares are up 6.4%!
In addition, its shares have been rising explosively between 4% and 11%!
But as with every explosive upmove, a pullback will be waiting. And I think that it could come soon.
When it comes, I’m prepared to take action because I’ve identified the price area where I would like to buy its shares.
What’s the price area?
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 Colgate-Palmolive (CL)
How do I know whether the shares of Colgate-Palmolive are suitable for an explosive swing trade?
I begin with identifying its price trend.
From Dec 24 to mid-Feb 25, the shares of Colgate-Palmolive were in a downtrend.
The tide turned in mid-Feb 25, and its share price began to roar magnificently!
While it’s great that the share price of Colgate-Palmolive is in a mighty uptrend, it’s better if its share performance beats the S&P 500.
Let’s have a look at the comparison chart above once again.
In the recent 3 months, the S&P 500 fell by 5.2%. In the same period, the share price of Colgate-Palmolive rose from the depths to clock a 2.6% rise!
Such outperformance is also welcomed because I’m looking for a potential return that’s greater than the market’s.
Because the shares of Colgate-Palmolive meet the above-mentioned criterion, I’m going to continue analyzing them.
How Explosive Is Colgate-Palmolive (CL)?
I’d love for my money to work hard for me. Hence, I’m going to find out whether the shares of Colgate-Palmolive are explosive enough to warrant my investment of time and hard-earned money.
In the last 11 months, the shares of Colgate-Palmolive have exploded upwards in price 13 times! Each time, the upmoves measured between 4% and 11%.
This is highly impressive for a defensive stock with an enormous market capitalization of more than $78b to explode in price consistently!
To say that I’m interested in buying its share for an explosive swing trade is an understatement.
Should I buy its shares now?
Key Price Levels
Doing this will help me determine whether I should buy its shares for an explosive swing trade now – uncovering its key price level.
This key price level that I’ll be uncovering is its support zone. A support zone is an area where its share price could return before launching itself higher. Thus, I’d want to identify this support zone.
Looking at its price chart again, I’ve identified a support area around $94.50. Did you notice this support zone as well?
So, instead of rushing to buy its shares now, I’ll patiently wait for its share price to dip to around $94.50 and bounce.
This approach has saved my students and I from countless heartache and money.
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.
It includes the mastery of your emotions.
But what if I told you that you could quickly gain control over your emotions of fear and greed and master the stock market?
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