This August, we’ve been waking up to daily tariff surprises, daily currency volatility, and stocks that are moving up and down in rapid fashion.
What’s the best tactical trading approach during a weak month like this?
Isolate companies that you like – those that have business models that are not affected by the root cause of the market volatility – and look to accumulate them on pullbacks to key support levels.
This is exactly what I’d like to do with PayPal (Nasdaq: PYPL) today…
As you know, PayPal operates as a technology platform that facilitates digital and mobile payments on behalf of consumers and merchants worldwide. These platforms include PayPal, PayPal Credit, Braintree, Venmo, Xoom and iZettle.
Looking specifically at Venmo, the company’s transaction volume jumped 70% year over year to $24 billion – and it’s now accepted by companies like Uber, Hulu, Grubhub and Shopify.
In the big picture, PayPal’s second quarter revenue rose 12% year over year to $4.31 billion, and its active customer accounts increased 17% year over year to 286 million.
So why is the stock down from $120 in late July to current prices around $104?
Two reasons…
First, PayPal reduced its 2019 full-year revenue targets. The company expects revenues of $17.6 billion to $17.8 billion for 2019, down from the previous range of $17.85 billion to $18.1 billion.
Second, on July 29, Guggenheim Securities downgraded PayPal, saying that the company receives 11% of its revenues from the United Kingdom, which is headed for Brexit and a dented economy.
You can see how PayPal has reacted to these two triggers…
Action Plan: When will the selling end? Well, let’s refer to the chart. Back in March, PayPal tested the $100 support level on two occasions – and then used it to launch up past $112.50 in April before taking a breather.
If this August pullback we’re seeing now retests this $100 level, I’d recommend adding shares of PayPal on the cheap.
Do you want to learn how to pick up on these trends in real time? You can sign up for the free Trade of the Day e-letter for more insight.
[adzerk-get-ad zone="245143" size="4"]About Bryan Bottarelli
Whether it was selling the Star Wars figures he collected as a little boy for 50 times their value or using the $125 he made cutting grass to buy a Michael Jordan rookie card that he later sold for $1,500, it was always clear that Bryan Bottarelli was a born trader – possessing the unique ability to identify opportunities and leverage his investments.
Graduating with a business degree from the highly rated Indiana University Kelley School of Business, Bryan got his first job out of college trading stock options on the floor of the Chicago Board Options Exchange (CBOE). There, he was mentored by one of the country’s top floor traders during the heart of the technology boom from 1999 to 2000 – trading in the crowded and lively Apple computer pit. Executing his trades in real time, Bryan learned to identify and implement some of his most powerful trading secrets… secrets that rarely find their way outside the CBOE to be used by individual traders.
Recognizing the true value of these methods, Bryan tapped into his entrepreneurial spirit and took a risk. He walked off the CBOE floor and launched his own independent trading research service called Bottarelli Research. From February 2006 to December 2018, Bryan gave his precise trading instructions to a small, elite group – most of whom have been followers ever since.
As a “play tactician,” Bryan uses his hands-on knowledge of floor trading to shape opportunities and chart formations into elegant, powerful and profitable recommendations. And by using the same hedging techniques taught by professional floor traders, Bryan is able to deliver his readers remarkable gain opportunities while strictly limiting their total risk.
Along the way, Bryan has developed a cumulative track record that could impress even the most successful hedge fund manager.
He now spends his days moderating one of the most elite trading research forums ever created: The War Room.
