This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
Welcome to our 16th part of our series on Systematic Trading!
In this part, you’ll discover two position trading opportunities in the US stock market.
Before you scroll further, you’ll want to check out our stock pick in December on Elanco Animal Health and UnitedHealth.
Are you ready to check out Datadog and The Travelers Company to discover if they are ready for a position trade?
Datadog (NASDAQ: DDOG)
1. About the Company
Founded only in 2010, Datadog is a young company.
Datadog provides a cloud monitoring and analytics platform for developers, IT operations teams, and business users around the world.
Its platform also offers user experience monitoring, network performance monitoring, cloud security, developer-focused observability, and incident management, in addition to a variety of shared features like dashboards, analytics, collaboration tools, and alerting capabilities.
The company operates a software-as-a-service business model where it has different price tiers for different needs.
And it has attracted big name customers such as Samsun, Shell, Deloitte, Nasdaq, and Eventbrite.
But how has Datadog’s shares been performing?
2. Position Trading (Daily)
Looking at the chart of Datadog, it’s easy to tell that its price chart is in a downtrend for there are more red candles (solid and outlined) than blue candles (solid and outlined).
You’ll also notice that there are more red arrows than green arrows.
Did you also notice that there’s a red arrow above Datadog’s latest candle?
The red arrow indicates that a new bear leg is formed.
So, should you short-sell its shares now?
Let’s have a look at the Trend Impulse Factor indicator.
The color of the bar of the Trend Impulse Factor indicator is important. If it’s dark green in color, it tells you that there’s momentum gathering and that the down leg could last for some time. This would increase your chance of profiting from the shares of Datadog.
Unfortunately, the bar of the Trend Impulse Factor indicator isn’t in dark green, so the time to short-sell its shares isn’t here yet.
I think that the time will come sometime in Jan 2023, so keep this in your watchlist!
The Travelers Companies (NYSE: TRV)
1. About the Company
The Travelers Companies was founded almost 200 years ago in 1853.
Through its subsidiaries, The Travelers Companies offers a variety of commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals around the world.
This company’s achievements make many envious – the second-largest commercial insurance carrier in the US, top 10 writer of personal insurance in the US, and the number 1 writer of workers compensation insurance in the US.
Given its track record and performance, The Travelers Companies achieved the feat of being the only property casualty company in the Dow Jones Industrial Average.
2. Position Trading (Daily)
From the chart of The Travelers Companies above, you can tell that it was in a clear downtrend until late Sep 2022 where the trend turned. An uptrend began and continues.
As the S&P 500 continues to slide, The Travelers Companies’ share price has been climbing relentlessly, creating multiple new all-time highs.
The bulls are clearly with this stock.
And this is confirmed by the green arrow under its latest candle.
However, a glance at its Trend Impulse Factor indicator reveals that this bullish momentum may not last for long as its bar isn’t dark green in color.
Hence, it’s a good idea to keep this stock in your watchlist for a long position trade. The time to buy its shares for a position trade isn’t here yet.
The technology sector is taking a beating from the rising interest rates. Datadog is no exception.
As its shares are in a downtrend, you’ll want to watch for short-selling opportunities for a position trade.
Explained in the technical analysis part, the time to sell its shares short isn’t here yet.
What about the shares of The Travelers Companies?
The shares of this company have been extremely strong!
Because its shares are in an uptrend, you’ll want to seize buying opportunities for a position trade.
The time to buy its shares isn’t here yet as well.
While you wait and observe these two stocks, there’s a concept I’d like to bring to your attention – the use of a stop loss.
Because the stock market doesn’t behave according to our instructions and hopes, it’s advisable to place a stop loss level to protect your trading capital, should an unexpected event occur.
Trading stocks without a proper system can be highly risky. This is why TradersGPS (TGPS) was created. The indicators will help you determine if a stock is ready for action to be taken. You won’t have to feel in the dark and make wild guesses.
What are your thoughts?
Share your thoughts with us below!