Tuesday, October 17, 2017

New Trade: BGC Partners – A Rare Financial Play

For those who follow me, this will be a shocker.  I am running a trade in the financial sector.  No, this doesn’t mean I’m bullish on the sector just yet.  Diversification is our friend and being heavy leveraged towards energy and , I saw an opportunity and jumped on it.  BGC Partners (BGCP) is the trade of choice and the chart is looking very strong, not far from 52-week highs.  Also of importance is I entered this trade last Thursday.  Unfortunately, due to time constraints, I’m a trader first and an author second.  That means I can not detail all of my trades in writing nor can I do it exactly when I enter.  Those in the live chatroom during the day and watching my twitter/stock talk updates are able to see my moves a bit quicker.  Keep that in mind so you don’t pay too high to enter trades if you are following me.  Patience is a virtue I do not have, yet I have learned is essential to master in the market.  Be careful not to overpay just to get in a trade as you can always find another stock that will go up.  Back to the trade at hand.

Stock Talk When I entered the trade

BGCP recently broke north from its trading range and is finding support off its 20-day SMA for a push higher.  The first key resistance level is $9.50, which is already showing it is tough to break. A move above that should create favorable odds we can test 52-week highs again.  The more we can test a resistance level, the more likely we will break it and another test of 52-week highs could break higher for much more upside potential.

After we created the last 52-week high, BGCP sold off over the next week and found support at the bottom of the trading range detailed in the chart below.  A bounce from the bottom of the trading range continued to find buyers reloading and a higher low was created.  The key resistance is best to be broken here else a move below the 20-day SMA would see some stop losses triggered and a trend back towards the bottom of the trading range.  While, this shouldn’t be devastating for BGCP, it could take some time to rebuild after losing some of the bulls. You can now get an idea where my stop losses will be placed and what I will be watching for in this trade. The strategy is to use tight stop losses in case this move up fails to break resistance and instead breaks support.  With the uptrending chart still intact, we have good odds resistance will be broken, barring a financial sector sell-off which is always possible these days.  This sector is so very news driven that I tend to stay away from it.  BGCP has a chart that is too good to pass up though.  See the chart below for more details.

Daily

Intraday Chart

 

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As always, do your own homework to see if you agree.  Good luck out there.

Mike

At the time of publication, Kudrna was long BGCP but positions may change at any time

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