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Today’s Trading Plan: Meta (NASDAQ: META) and StoneCo (NASDAQ: STNE)

Briton Ryle by Briton Ryle
December 6, 2022
in Analysis, Featured Articles
0
Caucasian businessman trading online, using computer technology, looking on stock exchange trade and analyzing

Yesterday, I laid out a couple of trade setups that I’ve been watching. 

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I gave some specific analysis and entry points for two trades, one for Meta (NASDAQ: META) and another for StoneCo (NASDAQ: STNE).

My top choice is StoneCo, so let’s start there. Here is a synopsis of why I am bullish…

Trade StoneCo (NASDAQ: STNE)

The company is fresh off a significant quarterly earnings beat, analysts are raising their estimates for the remainder of this year and all of next year, and the stock price itself had a fairly muted response to that earnings beat. 

As for the entry point specifics for a trade, I said this: The best entry point would be on a dip to or below $11. The second-best entry is a break above $11.90. 

We are getting that dip below $11, so let’s take action.

Buy to open the STNE call option at the 11-strike price that expires on December 16 at or below $0.60.

The goal of this trade is to catch a 5%-10% move higher for StoneCo over the next few days. Risk/reward is approximately 2:1. That is, we’ll double our money or take a 50% loss. So allocate accordingly…

Back to the Drawing Board for the Meta (NASDAQ: META) Trade

Now, the Meta (NASDAQ: META) trade. Yesterday, regarding an entry point, I said: 

“A re-test of the 50-day MA at $119.50 would make a nice entry point.” 

Yesterday, shares of Meta closed at $122.43. META opened today at $119.91. That 50-day MA at $119.50 was completely ignored as a support point – 5 minutes after the open, META shares were falling below $118.60. And 5 minutes after that (9:40 AM), shares had peeled off another dollar, to $17.60…

Shares seem to have stabilized around $115, but this trade is now off the table, null and void, back to the drawing board…

The whole point of watching a stock for a little while before risking real money on a trade is to get a feel for how the shares move. Once I get a feel for a stock, I’ll start to lay out some trade parameters based on how I expect the stock to move.   

In the case of Meta, a pullback from the recent rally was expected. And a ~3% drop from down to what should be support at the 50-day MA was a pretty reasonable expectation. But Meta shares were much weaker than I expected. 

And when things don’t go as I expect, the best course of action is to abandon whatever trading plan I had drawn up. So it’s literally back to the drawing board for Meta…

I will consider the StoneCo trade as an active position and will update you accordingly.

Take care, I’ll talk to you soon.

brits-sig

Briton Ryle
The Profit Sector

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Tags: META (NASDAQ: META)StoneCo (NASDAQ: STNE)Trading Stocks
Briton Ryle

Briton Ryle

I’ve been trading, investing, and sharing my insights with individual investors since 1998.  Back then, the internet was not a very useful research tool. Armed with a library card and a huge budget for the printer, I’d scroll the microfiche for Wall Street Journal and Financial Times articles. I bought technical books on wireless technology and fiber optic networks. I traveled to Chicago to learn the secrets of stock options trading directly from the experts on the floor of the CBOE.  I’ve attended and spoken at more investor conferences than I can remember…. All because I’ve always taken my responsibility to my readers and subscribers very seriously. I refuse to parrot popular opinion, offer up half-baked ideas or publish incomplete or half-hearted research.  There is no shortcut to deep research... becoming as close to an expert on topics, trends, and technology as possible. And the rewards are life-changing. The very first stock I ever recommended was South Korea’s SK Telecom. My readers enjoyed a 150% profit in a matter of months.  And after 25 years, I’ve helped tens of thousands of readers change their financial fortunes.  A few months ago, I donated all my suits to Goodwill, pulled my name off the list of speakers for the big investor conferences, and left the big city for Southern Georgia. The plan was to retire to the banks of a tidal creek that splits off from the St. Mary’s river as it enters the Atlantic between Cumberland and Amelia islands... and trade stocks when I felt like it. But, I guess retirement wasn’t for me after all. I’m back, and this is gonna be something special. 

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Protected by copyright laws of the United States and international treaties. This website may only be used pursuant to the Terms and Conditions and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of The Profit Sector, LLC. 415 1st Ave N #19868, Seattle, WA 98109

© 2022 The Profit Sector, LLC. All rights reserved. Our website provides stock market research, commentary, and analysis. Information is provided “as is” and solely for information purposes, not for trading purposes or advice.

Nothing on this website should be considered personalized financial advice. Any investments recommended herein should be made only after consulting with your personal investment advisor and only after performing your own research and due diligence, including reviewing the prospectus or financial statements of the issuer of any security. The Profit Sector, its managers, its employees, affiliates and assigns (collectively "The Company") do not make any guarantee or warranty about the advice provided on this website or what is otherwise advertised above. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. The Company is not affiliated with, nor does it receive compensation from, any specific security. To the maximum extent permitted by law, the Company disclaims any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations provided herein prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses.

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