Buying Opportunity for Fortinet?

Yesterday, we looked at a Daily Price Chart of  Oct. 18th, 2024 Buying Opportunity for Fortinet? Dear Reader, Yesterday, we looked at a Daily Price Chart of [Trade Desk Inc.](, noting that TTD’s 50-Day EMA is trading above the 100-Day EMA signaling a ‘Buy’. For today’s Trade of the Day e-letter we will be looking at a Moving Average Convergence/ Divergence (MACD) chart for Carvana Co. stock symbol: CVNA. Before breaking down CVNA’s MACD chart let’s first review what products and services the company offers. Carvana Co. is a leading e-commerce platform for buying and selling used cars. Carvana’s end-to-end online business model that covers every aspect of used-car retailing – including sales, financing, logistics, inspection and repair centers, as well as software development – has transformed traditional used-car sales in several ways. MACD Indicator confirms Price Momentum The CVNA daily price chart below shows that CVNA is in a price uptrend as the 24/52 day MACD line (black line) is above the 18-Day EMA (purple line). The Moving Average Convergence/ Divergence chart is shown below the daily price chart. MACD uses moving averages to create a momentum indicator by subtracting the longer-term moving average from the shorter-term moving average. The MACD is calculated by subtracting a stock’s longer term 52-Day Exponential Moving Average (EMA) from its shorter term 24-Day EMA. This creates the MACD line. MACD ‘Buy’ Signal The 18-Day EMA line functions as a buy/sell ‘trigger’. When the 24/52 Day MACD line crosses above the 18-Day EMA line it indicates positive momentum and higher prices for the stock. When the 24/52 Day MACD lines crosses below the 18-Day EMA it indicates negative momentum and lower prices for the stock. MACD is more of a leading indicator than a moving average crossover which tends to lag price movement. MACD Histogram shows Acceleration of Momentum Also included in a MACD chart is the histogram bar graph. This portion of the chart helps to illustrate the distance between the 24/52 Day MACD and the 18-Day EMA. When a crossover initially occurs, the histogram’s bar will be near flat as the two indicator lines have converged. As the lines begin to separate, the bars grow in height, indicating a widening gap and acceleration for the stock’s momentum. When the histogram’s bars begin to shrink this indicates a narrowing of the gap between the 24/52 Day MACD and the 18-Day EMA and a slowing of the stock’s momentum. When the gap between the two indicators begins to narrow, this typically indicates a crossover of the indicator lines could happen soon. Looking at this chart for FTNT, you can see the stock is in the midst of a strong bullish uptrend which we want to target. But this alone is not enough to convince me that I need to jump in on a trade right then. Another crucial component of placing successful trades over time is knowing the correct time to enter the trade. This is why I always look at the Keltner Channels before I fire off a trade. Keltner Channels can serve as an overbought or oversold indicator for stocks. If a stock’s daily stock price is trading above the upper Keltner Channel, this signals that the stock is temporarily overbought and subject to a retracement. Even stocks that are in the strongest bull trends do not advance in a straight line. There are always price retracements along the way. When a stock becomes overbought, more likely than not, the stock will soon experience a slight pullback. When we identify stocks in powerful uptrends, these are the stocks we want to trade and we use the Keltner Channels to help pick our entry point. When a bullish stock dips into our ‘Buy Zone’, this is when we want to put on a trade. The Keltner Channel “Buy Zone” occurs when a stock is trading below the upper Keltner Channel. Once the daily price is trading below the upper channel, it provides a lower-risk buying opportunity as the bullish stock is likely to continue rallying. [22 Weeks Straight of Winners and Counting](: Check out how you can start receiving these actionable recommendations today. BONUS: The first month[ is only $1](! How I Would Look to Trade It Now that we have identified the stock that we want to trade and we have pinpointed our entry point, the next question is how do we actually want to gain exposure to this trade? Of course, you could simply buy the stock shares, which we sometimes do, but many times when we spot a setup like this we want to add a bit more leverage to our position to unlock more explosive profit potentials. With a setup like this, we like to find a call option to purchase which would provide us with a little more leverage on our trade. By doing this, should the bullish trend continue, our trade is positioned to produce higher profits when compared to just owning the underlying stock shares. When selecting which call option to purchase, I often rely on my 1% Rule to help narrow down my choice of option strikes. The 1% Rule helps me select an in-the-money option that has a higher probability of producing a profit when compared to an at-the-money or out-of-the money option. Once I have one selected I will vet the trade using my Call Option Purchase calculator to determine the trade’s profit potential. Below is a snapshot of my Call Option Purchase Calculator that shows the profit potential analysis for my trade. This example examines a range of FTNT shares remaining flat up to a 12.5% increase at option expiration. 99.8% Profit Potential for FTNT Option The trade analysis shows that if FTNT shares were to increase by just 1% at option expiration, this trade would make 8.6%. Then looking at a few of the bigger potential moves, if FTNT shares were up 5.0% at option expiration, our option would be set to profit 49.2%! If that doesn’t sound good enough, get this, if FTNT shares were up 10.0% at option expiration, this call option would be set to produce a 99.8% profit! That means the call option would outperform the stock nearly 10 to 1! By following my 1% Rule to select which call options to purchase, this has helped me in the past to juice my trade’s profit potential, just like in the example shown above. Additionally, the 1% Rule helps to increase the odds that the option will profit as the underlying stock only has to increase by 1% for the option to begin profiting. The Hughes Optioneering Team is here to help you identify high-probability trades just like this one. Check Out My Recent Winner! This week, I had the pleasure of informing my PRO Trading Service members about closing out a significant win. NextEra Energy (NEE) generated a strong buy signal, prompting me to send an alert to my members on September 4th to enter a call option position for NEE. By September 16th, the position had already gained 28%, so I recommended that members lock in some of those profits. Then, on Monday, I advised members to exit the position—securing an impressive 70.7% return!* This is just one of many recent successes in my PRO Trading Service. I don’t want you to miss out on the next opportunity to work toward your goals. That’s why I’m sharing [this video]( I made about my PRO Trading Service. I’d love for you to follow in my footsteps and seize the chance to achieve your dreams. Call my office at (737) 292-4425 to get started today! Wishing You the Best in Investing Success, Chuck Hughes Editor, Trade of the Day Have any questions? Email us at [dailytrade@chuckstod.com]( *Trading incurs risk and some people lose money trading.  --------------------------------------------------------------- See Related Articles [Fresh ‘52-Week High Alert’ for CVNA]( [TTD: Powerful ‘Buy’ for this Ad Platform]( [Check Out This ‘Sizzling Hot’ Stock]( --------------------------------------------------------------- [TradeWins Logo](  © 2024 Tradewins Publishing. All rights reserved. | [Privacy Policy]( | [Terms and Conditions]( | [Contact Us]( If you didn't create an account using this email address, please ignore this email or unsubscribe using the link below. 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