by Shane Ormond
On Feb 20, 2020
Shares of Groupon and Blue Apron tanked yesterday after their quarterly reports reignited skepticism about the companies’ “unconventional” business models. (And by “unconventional” I mean “doesn’t work.”)
Blue apron, groupon, e-trade, morgan Stanley
Blue apron, groupon
Yesterday, we looked at a monthly chart of Global Payments, Inc., noting the stock has been on a bullish run since February 2019.
Today’s Chart of the Day is a Keltner Channel chart for eHealth Inc. (NYSE: EHTH).
eHealth, Inc. provides private health insurance exchange services to individuals, families, and small businesses in the United States and China. Its e-commerce platforms organize and present health insurance information in various formats that enable individuals, families, and small businesses to research, analyze, compare, and purchase a range of health insurance plans.
Now, the Keltner Channels serve as an overbought/oversold indicator. When the daily stock price is trading above the upper Channel, it signals that the stock is overbought.
There are always price retracements along the way, because stocks in a price uptrend do not advance in a straight line.
When a stock becomes overbought, it normally declines in price as the inevitable profit taking occurs.
Below is a daily price chart for eHealth Inc. along with the three Keltner Channels (Upper, Middle, and Lower).
The EHTH daily price chart shows that EHTH is in a strong price uptrend and recently became overbought many times as the stock traded above the Upper Keltner Channel (circled in red). As you can see, after trading above the Upper Channel in all scenarios, EHTH experienced a pullback.
Yet, even though EHTH experienced the pullbacks, in all cases the 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.
If you had purchased EHTH shares when EHTH entered the “Buy Zone” around January 14th, you’d be up 41.64% on the stock by now.
Knowing that EHTH 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.
Maximizing Our Profit Potential
Additionally, we’d like to talk about how a previous Chart of the Day stock has done…
On January 14th, we highlighted ASML Holding NV (NYSE: ASML), noting that ASML’s monthly price was trading above the 10-Month SMA.
If you happened to have purchased ASML shares on that day, you’d already be up 5.24%.
But… if you had purchased the right option contract, you would be up 47.3% in just over a month’s time!
That’s why we focus on leveraging options in my premium research trading and training service, PowerTrend Options.
My “X-Ray” system — based on pure, technical analysis —is what I’ve used to trade options, win international trading competitions, and support my family for the past 30 years.
Members of my service even have access to my most extensive training program ever…
A 30-day PowerTrend Academy, that uses videos, quizzes, and glossaries to help explain my system from every angle. That’s because I want you to see exactly what I’m doing — no secrets, no patented algorithms. Just the facts.
Not to mention, the service itself provides up to two trades every week.
Because I truly believe, and from personal experience, that one option trade has the power to completely change your life.
But we know that some people like to walk before they run… and so we designed a class just for them, called the Thunderbird Options Course. Complete with syllabus, videos, and quizzes. Check out the details if you haven’t yet!
Editor, Chart Of The Day