EarningsBeats.com Digest for December 10, 2021
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Defining A Strong Price Support Level
I've been asked plenty of times before, "how can you tell exactly where price support resides". Well, sometimes there are multiple levels of price support where a stock has previously bounced. In that case, there's a "zone" where you might expect buyers to step in, so an EXACT price support level is difficult to identify. Other times, one
key price level seems to be a magnet to attract buyers. Let's look at Veeva Systems (VEEV) as an example:
Over the past 18 months, it's pretty clear to me that trips back below 250 begin to get very interesting from a long perspective. We have now seen 4 different selloffs that resulted in price dipping below 250, yet not on any of those selloffs have we seen a close beneath 240. As a trader who's trying to enter at the best possible price with limited downside, the 240s seem like a great spot. Of course, none of this guarantees that we'll see 240
support continue to hold, but entering in the 240s with a failure at 240 is a lot less costly than entering in the 280s with a failure at 240. Trading success is about patience and risk management.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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