Price Action Observations 03/10

Here are some interesting price action observations based on today’s trading action. It can help you manage and uncover new opportunities.

Genius Brands International GNUS ~ Will this stock ever soar again?

If there is one stock I have been consistently wrong, then it has to be GNUS. It seems today also, I raised a wrong alarm as the stock went up to 2.33 and sold off again. Sometimes, we just don’t learn 🙁

Why did I cover the stock again today? – GNUS is in a kid’s entertainment business and it has a digital network Kartoon Channel on smart TV platforms and it’s coming up with a new show Superhero Kindergarten starring Arnold Schwarzenegger. The show premiers on April 23 2021 and no wonder the stock this month has rallied aggressively from lows. If there is one news that can spark momentum in the stock is news like this. All the stock needs to do is break the barrier of 2.33 and then can just fly. The big question: Is this news going to provide that wing?

Trading Strategy: Go Long on GNUS at 2.14 with a stop loss below 1.98 and a target of $4+.

Sectoral Rally in Oil Exploration companies

The stock leading the price action in the space: RIG Transocean. It was an opportunity to be picked at 4 but the market volatility prevented from taking the trade. The stock made a stunning 18.5% trade and if this is a 50% kind of breakout move, then one can expect a rally to $6.

Where should you put a stop loss if you are buying at 4.68. I would put it below 4.2. Yes, it’s tough trading in such situations.

Wells Fargo – Hold

I like a stock when there is a theme and strong price action behind it. Wells Fargo is a beneficiary of higher bond yield/strong economy theme but what really sparked everyone’s interest: a large candle move in the stock on back of US Fed accepting asset cap review application. A buy trade was triggered at 36.5 last month and now the stock is up 8%, not bad in a chaotic market.

One should be bullish on a stock that’s doing what one expects and is making a clean move.

General Motors – Hold

I have been recommending General Motors as a structural breakout story since 30 and then 45 and 50. The stock did extremely well to hold on to the gains despite the broader market panic.

The stock continues to be hold.

Making Sense of AMD

There is a trading rule which states that one should buy a strong uptrending stock on dips especially when its building a base or at a popular moving average support. AMD is doing just that and hence one would not be wrong to buy the stock around $75

AMD stock is also at 50 week moving average.

But the biggest risk is not the stock risk but the market risk. If the NASDAQ and the tech stocks continue to exhibit panic and chaos and for whatever reason AMD stock cracks below $70, then it can tumble down to $55 in no time. So, if you are considering to buy the stock near $75, beware of this risk. Having said that, if you are a long-term investor, then there is nothing to worry about because whenever the market panic will subside, this stock will be the first one to recover.

Macy’s and Coty ~ Stimulus Check beneficiary

As the economy opens up and covid pandemic subsides and more people receive stimulus check, it’s likely to benefit companies like Macy’s and Coty.

I covered both the stocks earlier this week and both stocks continue to be hold.

Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers