DFS trade ideas
Discover Financial: Inside Week, Outside Week, Trendline Break?Financials have been coming to life recently, and soon it could be Discover Financial’s turn.
The credit-card issuer has squeezed into a tight range since late summer. The result was an inside week (begun October 4) and then an outside week (begun October 11). That may suggest it’s starting to break out.
Next, you have the downward sloping trend that began on August 13. DFS is just now trying to push above it.
Third, the stock has fought back above the 100-day simple moving average (SMA) in the past month, gradually turning it into support. Last week, it managed to not only hold that line again but fight back above the faster-moving 50-day SMA.
The 8-day exponential moving average (EMA) has also remained above the 21-day EMA. This may suggest bulls are quietly taking control in the shorter time frame. Steadily rising MACD gives a potentially similar signal.
Finally, earnings are due on Wednesday afternoon. This could be bullish because last quarter’s numbers were boosted by fewer charge-offs. The credit environment has apparently continued to improve since then, judging by results at big lenders like Bank of America and JPMorgan Chase .
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DFS🌦Bullish on DFS for earnings. People often ask me how in the world I trade with no indicators. I use a combination of portfolio management, economics, fractals, inter-market analysis and Elliott wave. Most indicators are lagging and only tell you the pattern after it has formed. The inter market analysis allows one to ascertain the general direction of the markets. In order to know if the SPX500 will tank I merely rely on the Japanese yen pairs they help immensely. The economics division is derived from what Biden/congress and Jpow do. They are paramount for the direction of the market. If an announcement is made regarding higher interest rates it will likely come from the FOMC (Federal Open Market Committee). The effect of higher interest typically leads to lower lower borrowing, lower consumption and lower asset prices. This is why when the TNX goes up even a little it can dramatically effect the market especially the tech sector. Interest rates that are going up can lead to lower inflation rate. With less people borrowing as result of interest rates going up less people will consume less consumption will not stimulate the economy which leads to disinflation which is the fall in the growth rate of inflation. I use a modified version of Elliott wave I keep certain concepts like how the markets move in waves that follow fib numbers and that patterns tend to repeat themselves. How do I know if a stock is ready to head to the moon? Its simple really I use fractals or what I like to call LDCs to help determine potential entry points for calls. There is one caveat. Not every stock follow tradable patterns. The criteria for identifying good stocks is threefold. Number 1, I want a stock with market cap greater than $15 B dollars. Number 2, the beta needs to be at least 1. Number 3, the dividend yield should not exceed 2%.
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DFS Sizing up price discoveryWhile not really low-risk, high-reward, DFS did retest its old pre-corona high as support over the past few days-weeks. Since this level held, price-action could see the top of the channel next. Targets at the 1.414 and 1.618 Fib extension to keep a 3:1 Risk-Reward. Weekly MACD close to going negative, so watch out with position size.
My Monday Trade Possibility This is one of multiple possibilities and I will only be following through with one as price and timing has to be perfect. I love this opportunity as the Bollinger Bands have met a bottom point signaling a buy opportunity. Also the most recent candles have fallen deep into support territory and with the divergence indicator you can see that there is strong Bullish divergence along with MACD about to curve upward. I really like what I see and can vision DFS hitting $70 by Friday. That will be the call I purchase if the price and timing is right. Stay tuned and follow for updates!
DISCOVER FINANCIAL SERVICES Estimates DailyHello traders, DISCOVER FINANCIAL SERVICES is in a fake bearish configuration with a large volume of buy executed and a bullish shadow of sellers. On the TIMEFRAME 1 Min we observe a collapse of the price and heading towards the last precedent lower. Who is in the bullish gap then start to rise again with great likelihood of filling the bullish gap. And go to the next highest to make an attempt to test its median.
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FundaTechno Analysis | Discover Earnings PlayWith current stretched valuations, I am avoiding any positions that require 2+ weeks holding to play out. DFS is trading on support with earnings this week, consumer discretionary is the best performing SP500 sector, I am looking for this to show in discover. While American express and now even Mastercard are being dropped by large vendors due to higher fees (Costco no longer takes Mastercard), discover should stand out a bit especially when looking globally.
Keeping up with 3 higher lows, I am feeling bullish on DFS earnings and expect at the least a retest of the channel top. A break and candle close above the 3 month support turned resistance at $51~ would be VERY bullish.
FundaTechno Style
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