by Shane Ormond
On Jan 21, 2020
Now that the Chinese factory is complete (and just in time for a deadly virus outbreak), self-proclaimed “Buff Mage” Elon Musk is turning his attention to Germany, where colonies of bats and unexploded World War II bombs threaten to undermine investor confidence. (Those are not metaphors.)
Yesterday, we looked at a monthly chart of Direxion Daily Small Cap Bull 3x Shares, noting the stock has been on a bullish run since November.
Today’s Chart of the Day is a Keltner Channel Chart for PNC Financial Services Group, Inc. (NYSE: PNC).
The PNC Financial Services Group, Inc. operates serving their clients in four different segments of the banking industry. These segments are retail banking, corporate & institutional banking, asset management, and their BlackRock segment. As of December 31, 2018, it operated 2,372 branches and 9,162 ATMs.
Now, the Keltner Channels serve as an overbought/oversold indicator. We know that when the daily stock price is trading above the Upper Channel, it signals that the stock is overbought.
And since there are always price retracements along the way…
We know that the prices inevitably decline after a stock becomes overbought, because some shareholders decide to take their profits.
Below is a daily price chart for PNC Financial Services Group, Inc. along with the three Keltner Channels (Upper, Middle, and Lower).
The PNC daily price chart shows that PNC is in a strong price uptrend and recently became overbought many times as the stock traded above the Upper Keltner Channel (circled in blue).
As you can see, after trading above the Upper Channel in all scenarios, PNC experienced a pullback.
Yet PNC stock always continued to rally afterwards…
If you want to participate in this rally, where is the best place to enter?
We use the Keltner Channels to help us select a lower-risk entry point.
A Keltner Channel ‘Buy Zone’ occurs when a stock is trading below the Upper Keltner Channel. Once the daily price is trading below the Upper Channel, it signals a buying opportunity.
Maximizing Our Profit Potential
On October 2nd 2019, PNC stock shares had a significant pullback after a period of being temporarily overbought.
If you had purchased PNC shares when PNC entered the ‘Buy Zone’ around October 2nd, you’d be up 18.17% on the stock by now.
But… if you had purchased the right option contract, you would be up 248.27% in just three months time!
That’s the power of options, and exactly the kind of trade we recommend in my elite service, PowerTrend Options, which at the time of writing, has a completely positive portfolio.
Knowing that PNC shares are continuing to rise, experience pullbacks, and rally again, we’ll be paying attention to future pullbacks in order to get in at the lowest entry point.
Editor, Chart Of The Day