Falling trends are multiplying across the country, and bear species are rising. Nevertheless, it is Nasdaq Composite still shooting from its top, about 40% of the index was halved. The problems are below the surface, leading to a narrowing of leadership and ultimately to more vulnerabilities. I reviewed my list of suppressed and discovered three ugly stocks that need to be sold before they get worse.
And you don’t have to perform any mental gymnastics to understand why lower prices are promising. The lower stocks were stuck in unpleasant downward trends. And this is very important because the direction of the trend is the most important of all technical signals. It sits at the top of the graphing hierarchy and demands respect from all who use technical analysis. In short, it is much better to bet on a trend than against it.
Nevertheless, there are three stocks in difficulty here that are willing to lower prices.
Let’s take a look at each chart in more detail and plan smart options trading that you can use for further weakness.
Bankrupt shares for sale: PayPal (PYPL)
Distance from the top: -43%
PayPal could still fall a long way, even though it would almost halve it. Upon entering the 2020 pandemic, the PYPL was $ 125, another $ 50 lower than here. Over the past six weeks, the daily declining trend has slowed and formed a sideways trading range. But instead of climbing to the top and creating a compelling bullish breakthrough, it hits hard at the bottom. The $ 177 support policy lasted long enough for its failure to prove to be a significant failure.
If previous support suspensions are any sign, you could see a quick drop to $ 160 if vendors press their bets. Given the higher volatility of the stock, I suggest using diffuse trading instead of outright purchases.
Trade: Buy a vertical bar for $ 175 / $ 160 for $ 4.75.
You risk $ 4.75 to earn $ 10.25 if PYPL shares fall to $ 160 by the end.
Distance from the top: -56%
Snap’s unfolding after a profit in the last quarter was deadly. If a single post causes stocks to fall more than 50% in a quarter, it’s appalling and speaks to how much Street hated the numbers. Prices are now submerged deep below all major moving averages.
Again, it is tempting to claim that SNAP shares have fallen so much that they cannot fall lower. But just like PayPal, way lower before the pandemic. Shareholders hope the quarterly report on February 3 will save them. For now, I think the downward trend is continuing. Prices have dropped dramatically in the last three days, so if you want to wait for a deduction before entering, do so.
Trade: Buy the vertical range for February 37 USD / 32 USD for 1.90 USD.
You risk $ 1.90 to earn $ 3.10 if your SNAP drops to $ 32.
Bankrupt shares for sale: Adobe (ADBE)
Distance from the top: -26%
Adobe completes today’s hat trick in selling stocks. It is true that it has survived much better than its predecessors, but it is still in bear market territory and has a daily chart that looks bleak. This has been a big stock for the last decade and every dip was eventually bought. The current one, however, seems different for two reasons.
First, it’s the deepest we’ve ever fallen below the 50-week moving average. Second, growth stocks are now probably more hostile than in the last few corrections.
Thursday’s turnaround triggered a new drop, with prices expected to fall below $ 500. Don’t be put off by the high price of the Adobe share. We can build a cheap range of options.
Trade: Buy a vertical for $ 520 / $ 500 for $ 8.45.
If ADBE drops to $ 500, you risk $ 8.45 to earn $ 11.55.
At the time of publication, Tyler Craig did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.
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