Thought the market cared about the coronavirus? Think again!
According to the most recent data from the World Health Organization (WHO), the outbreak has infected over 20,000 people, almost all of whom are located in China. 727 have recovered, while have 427 died.
Investors couldn’t be bothered by the outbreak this morning, though, as evidenced by a market-wide surge. The S&P, Dow, and Nasdaq Composite all opened the session with a bang before closing higher in the afternoon. Tesla logged another massive daily gain as well, sending the EV-maker’s shares to dizzying new heights.
If equities keep rising to end the week, the bull market will be “on” once again.
And so, with stocks eyeing a complete turnaround, many short-term traders have turned their attention to oversold stocks.
Particularly those that are mounting a comeback of their own, like Nutanix Inc. (NYSE: NTNX).
In the daily candlestick chart above, you can see that NTNX has endured some selling over the last few weeks. The stock (which we went long on for a nice gain) did well to start the year, but eventually got crunched during the initial coronavirus scare, even though it didn’t quite track the market over the last few months.
Now, however, after bouncing off the lower Bollinger Band (BB) and setting a second higher low in a row, NTNX has broken out above its minor bearish trend (represented by the yellow trendline).
In addition, the current price action has taken the stock above the 50-day moving average – a natural level of resistance. The stochastics indicator looks good, too, and lingers near oversold territory.
Should NTNX climb above the current day’s high, it might make sense to go long with a trade trigger of $34.90. From there, a clear path to a higher high lies ahead, past resistance at the high of mid-January.
And though NTNX dropped alongside the market during the coronavirus slump, it typically behaves independently. That means that even if stocks chop sideways over the next few sessions after today’s big gain, NTNX could still see a “burst” upwards.
All while “buy, hold, and hope” investors wonder where the market’s truly headed.
