A nice little bounceback here for the bulls today. We had a nasty little four-day run, so not a big shock here, but I think this is a rally to lighten up on if you were squirming the last few days or managed to catch the lows yesterday. There's always the chance for the V bounce, but right now the same setup technically as the previous V bounces is not present, so I'm apt to be patient here.
I am watching for a good-size move in GoPro (GPRO). The stock is near the bottom a very bearish channel spanning the last four-plus months. It actually looks like it could be a trading buy here. A very clear bottom has formed at $37 in the short term, and the resistance for the stock looks to be in the $45-$47 area.
Also, we have some oversold areas to work off right now. I would absolutely want to define risk here, so calls, or more preferably April call spreads, look like an attractive play. Usually a position like an April $39-$44 call spread for a little under $2, or the April $40 call for $2.30 for the more aggressive trader, looks like an attractive risk-reward here. While I'm not big on the valuation or even the long-term prospects at these prices, I view the short term as a different story and one I'm willing to risk.
Brazil has been a mess lately, as well as most things Brazilian-stock oriented. Like GPRO, though, we may have some signs of a short-term bottom. Again, it is about risk and reward with a clearly defined risk. Companhia Brasileira de Distribuicao (CBD) offers that clearly defined risk about $0.75 below the current price, or a bit more than 2%. If the stock closes under $30.70, then I would take my loss and move on, but this too looks like it has the workings of a short-term bounce from oversold levels.
The first upside target is about $1 higher, with a maximum target of $2.50 to the upside. When we can define risk and see clear targets that outweigh the downside risk via the chart, then a stock certainly merits a closer look. Here, we add the oversold nature, but the slight bullish divergence in the money flow index along with the bullish crossover in the stochastics tilt the reward side of the equation in our favor. With anything Brazilian, I would keep the position tight and trim quickly, as I don't trust the stability of the region, but that doesn't mean there isn't opportunity. Along with GoPro, I see this one as an opportunity.
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