by Shane Ormond
On May 21, 2020
Target reported that online sales on an average day in April exceeded last year’s Cyber-Monday sale, because if you’re not going to buy a Cuisinart Perfectemp 14 Cup Programmable Coffee Maker at the end of the world, when are you gunna buy one?
Market Update: The futures this morning pointed towards a positive day in the markets after another large drop yesterday. The market seems to think that Congress is close to a coronavirus relief deal being passed.
Though we may start off in the green, we are still firmly in a bear market as the major indexes are still around 30% off from their previous highs.
The good news is that even in a bear market, traders can make a profit if they utilize the right strategy.
My PowerTrend system applies just as well in bearish markets. I shift my focus from bullish call options and call option spreads to bearish put options and put option spreads, but the underlying system remains the same.
Now, let’s beat the bear market and start making money!
Yesterday, we looked at a Daily Price Chart of Blackbaud Inc. and noted that it was showing a ‘sell’ signal after its monthly price is trading below the 10-Month SMA.
Today’s chart is for Chevron Corp. (NYSE: CVX).
Chevron Corporation, through its subsidiaries, engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream.
Now, the Daily Price Chart below shows that CVX has been making a series of 52-Week Lows since late January.
When a stock hits a new 52-Week Low, it’s undoubtedly in a very powerful downtrend.
Stocks in a price downtrend, as we know, do not advance in a straight line – there are always price retracements along the way.
CVX experienced periodic price rebounds during its strong decline since January.
Traders can get a lower risk entry point for bearish put purchase trades after a 3 to 5% price rebound as the stock normally resumes its price downtrend after such retracements.
We’ll be sure to continue following Chevron Corp. as it drops to new lows, and watching for price rebounds.
Additionally, we’d like to talk about how a previous Chart of the Day stock has done…
On March 18th, we highlighted Exxon Mobil Inc. (NYSE: XOM), noting that XOM shares had been making a new series of 52-Week lows.
Since March 18th, XOM shares have gone on to drop 14.67%.
If you had purchased the right put option contract, you would be up 76.84% in less than a weeks’ time!
That’s the power of options.
Editor, Chart Of The Day