Trade Ideas Newsletter 08/05/2016

DFS is positioned for a contrarian breakdown

Based on the above analysis in DFS, traders should verify that their portfolio can handle increased risk from an additional position. Also ensure that DFS improves diversification in your current portfolio. Lastly, clever traders check how a new position matches up with not just their account, but the previaling market action as well. For example, take a look at the S&P 500. Is it moving to the upside or downside? Has it recently broken a key ceiling or floor? Be sure to line up your trading actions on DFS with the trend in the overall market.

CHART

Right now the proprietary sentiment levels, calculated by Traders For Wealth, indicate an suprisingly positive bias toward DFS. However, the price action in DFS has been moving down contrary to the sentiment. This could be a strong sign of an impending contrarian breakdown. Traders should view this as a bearish position and make sure it is confirmed by overall market action, and in line with their current portfolio.

Discover Financial Services (DFS)

Discover Financial Services (DFS) is a direct banking and payment services company. The Company is a bank holding company, as well as a financial holding company. The Company operates through two segments: Direct Banking, which includes consumer banking and lending products, specifically Discover-branded credit cards issued to individuals and small businesses on the Discover Network and other consumer banking products and services, including personal loans, home equity loans, and other consumer lending and deposit products, and Payment Services segment, which includes PULSE and its Network Partners business. PULSE is an automated teller machine, debit and electronic funds transfer network. The Company’s Network Partners business provides payment transaction processing and settlement services on the Discover Network. The Company provides direct banking products and services, and payment services through its subsidiaries.