Markets continued to rally yesterday, but futures are flat as of 7am ET. As social distancing remains alive and public businesses remain closed, more business is being conducted online than ever before.
Despite the fact that stocks are trading lower than they were a month ago, it’s important to accept the fact that just because a stock’s price drops, it doesn’t always mean the company’s products don’t have consumer demand.
With consumers doing a sizable amount of their business online as a social distancing safety precaution, Square Inc (NYSE: SQ) lets merchants process payments via smartphones with a simple app, which has received 25% higher than average downloads over the last 30 days in a recent press statement by the company’s founder, Jack Dorsey.
As a result of high demand in the world of online retail, Dorsey also stated that Square itself expects to report about $1.34 billion in revenue this quarter versus its previously forecasted $1.29 billion in quarterly revenue.
Upon Dorsey’s press release, financial institutions including Wells Fargo, BMO Capital and SunTrust Robinson Humphrey publicly announced their bullish stances on the company, despite its stock price per share dropping with broader markets.
After yesterday’s +3% stock market rally, Square is now trading pennies above its 20 day simple moving average line support, indicated in green on the chart below. Should recent financial professional word of mouth spread, Square may be traded to the upside today by financial institutions. Therefore, I’ll be looking to do the same and ideally pay myself as a result by the end of the trading session.
That said, lately I’ve noticed many traders saying “markets have been so volatile lately, what do I do if markets witness another sizable intraday pullback?”
And that’s a great question. Simple as this, should markets fall to the downside and Square’s stock trades below its 20 day simple moving average line support as well, I’ll be looking to make a bearish bet by taking a short position as a day trade on the stock itself. Ideally, I’ll be able to pay myself by the end of the trading session as a result.
While Square has bullish fundamentals right now, the chart is perfectly positioned to be potentially traded both ways in what is a flat premarket trading session.
Due to recent financial professional sentiment on the stock itself if markets make a 2% move today, I’d expect Square to make a 3% move. Therefore, I’ll be looking to trade it today, ideally right alongside financial professionals.
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Disclaimer: This is not investment advice. This article is for information purposes only and opinion-based on financial advisor data across a selection of websites. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions.