Yesterday, we looked at a Daily Price Chart of ChemoCentryx, Inc. and noted that the stock had been making a series of 52-Week Highs.
Today’s Chart is for Baozun Inc. (NYSE: BZUN).
Baozun Inc. provides brand e-commerce service to brand partners in the People’s Republic of China. It offers end-to-end e-commerce solutions, including IT infrastructure setup and integration, sale of apparel, home and electronic products, online store design and setup, visual merchandising and marketing, online store operations, customer services, warehousing, and order fulfillment.
The Daily Price Chart below shows that BZUN has traded in a clear bearish pattern of lower lows and lower highs since July.
Track the Price Chart from upper left to the lower right…
This bearish trading pattern points to a further decline.
You see, typically stocks that make a series of two or more lower lows and lower highs reliably continue on in a downward trend. This bearish trend makes BZUN a good candidate for a put option purchase.
But it’s important to note that strong stock drops have quick rebounds along the way.
These rebounds present a buying opportunity for us.
Purchasing BZUN puts after a 3 to 5% price rebound has provided a good entry point for the option during this downtrend and has produced a healthy return.
We’ll keep watching BZUN as it breaks through its previous lows and waiting for price rebounds.
Editor, Chart Of The Day