Tuesday, July 23, 2024

A Bullish Signal in a Choppy Market

Trade of the Day Wake-Up Watchlist

Nate Bear, Lead Technical Tactician, Monument Traders Alliance

Nate Bear

Believe it or not…

My "crystal ball" is still in the shop.

Without it, I'll have to rely on a tried-and-true method.

Which is to buy strong stocks in areas of support.

And that's what we've got a chance to do with T-Mobile (TMUS) currently.

Shares of the stock took a hit on Monday in sympathy to poor earnings results out of Verizon Communications (VZ).

While both companies generate the majority of their revenues from wireless services, they operate differently.

T-Mobile's superior performance is evident in its stock price, up 28% over the last year compared to Verizon's 16%.

 

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I view its recent dip as an opportunity to add TMUS to your watchlist, with potential for a long position.

The stock has pulled into a buy zone at the 20-day exponential moving average, a level it has closed above for the last two months.

It is worth noting that T-Mobile has earnings on July 31, 2024.

So while I do like this setup, and I do have an options position in T-Mobile[1] , I'm looking at this with a very short term outlook.

This watchlist addition is particularly relevant for those interested in playing a potential pre-earnings run-up.

I believe the best play to trade earnings is either before the release, which is playing for a potential run up, which is what I'm doing here. And exit before it announces.

I will trade the stock again after its earnings release if it shows me the right pattern.

While I don't know if this trade will work, over the last four earnings, the stock has risen by nearly one percent on average, 8 days before its earnings release.

Action Plan: A lot of charts I'm looking at are messy looking given the volatility in the market the last two weeks.

However, TMUS has a good looking chart, and its current price is near my buy zone. Yesterday I initiated a position via call options in my Profit Surge Trader Portfolio.

If you'd like to discover all the details behind my trade and many others, click here for further details.

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