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Welcome to Episode #390 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Stock Strategist and the Editor of Zacks Counterstrike and the Commodity Innovators portfolios, Jeremy Mullin, to talk about what Fibonacci levels are and how to use them to do better stock trades.
What is a Fibonacci Level?
Fibonacci retracement levels are named after a medieval mathematician, Leonardo de Pisa, who later became known as Fibonacci. Some regard him as a math genius and the man who brought the Hindu/Arab numbering system to Europe.
Fibonacci retracement levels are a strategy that some traders use to analyze a stock’s resistance levels. You can use many different retracement levels but one of the most common is 61.8%.
How do you use Fibonacci Levels?
A lot of this podcast is looking at the charts on 5 popular stocks. Jeremy draws Fibonacci levels for each and discusses what he sees as retracement levels.
To get the most out of this podcast, please watch the video podcast to be able to see the charts, although Jeremy does an excellent job at explaining it for those only able to listen in on the audio podcast.
Super Micro Computer has been the hottest stock on Wall Street over the last year. Yes, it’s hotter than NVIDIA. Shares of Super Micro Computer are up 779% over the last year with some saying it has gone “vertical” in 2024.
Tracey recently bought shares of Super Micro Computer for the Insider Trader portfolio when an insider bought after the recent earnings report. She has taken some profit off the table this week.
What does the Fibonacci levels tell us about Super Micro Computer’s extraordinary rally?
ServiceNow has been a winning stock for years, with shares up 229% over the last 5 years. That easily beats the S&P 500’s return of 78%. Shares of ServiceNow have also gained big in the last year, adding 68.8%.
What signals are the Fibonacci levels sending traders on ServiceNow today?
Snap shares plunged recently after a disappointing earnings report, falling 32.2% over the last month. Over the last year, shares of Snap have moved in a narrow trading range and were up, but just 4.6%.
It’s not as easy to deploy the Fibonacci levels on stocks with less volatility and narrow trading ranges but Jeremy shows examples of where the Fib levels would be.
Should traders avoid stocks like Snap that have broken down?
Image: Shutterstock
How to use Fibonacci Levels to be a Better Stock Trader
Welcome to Episode #390 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey is joined by Zacks Stock Strategist and the Editor of Zacks Counterstrike and the Commodity Innovators portfolios, Jeremy Mullin, to talk about what Fibonacci levels are and how to use them to do better stock trades.
What is a Fibonacci Level?
Fibonacci retracement levels are named after a medieval mathematician, Leonardo de Pisa, who later became known as Fibonacci. Some regard him as a math genius and the man who brought the Hindu/Arab numbering system to Europe.
Fibonacci retracement levels are a strategy that some traders use to analyze a stock’s resistance levels. You can use many different retracement levels but one of the most common is 61.8%.
How do you use Fibonacci Levels?
A lot of this podcast is looking at the charts on 5 popular stocks. Jeremy draws Fibonacci levels for each and discusses what he sees as retracement levels.
To get the most out of this podcast, please watch the video podcast to be able to see the charts, although Jeremy does an excellent job at explaining it for those only able to listen in on the audio podcast.
5 Popular Stocks and Their Fibonacci Levels
1. Super Micro Computer, Inc. (SMCI - Free Report)
Super Micro Computer has been the hottest stock on Wall Street over the last year. Yes, it’s hotter than NVIDIA. Shares of Super Micro Computer are up 779% over the last year with some saying it has gone “vertical” in 2024.
Tracey recently bought shares of Super Micro Computer for the Insider Trader portfolio when an insider bought after the recent earnings report. She has taken some profit off the table this week.
What does the Fibonacci levels tell us about Super Micro Computer’s extraordinary rally?
2. Palo Alto Networks, Inc. (PANW - Free Report)
Palo Alto Networks is a red-hot stock in 2024, with the shares hitting new highs. It’s up 125% over the last year and 387% over the last 5 years.
But is Palo Alto Networks now too hot to handle? It’s up 13% in the last month alone.
Are the Fibonacci levels signaling it may be time to short Palo Alto Networks? Or does the rally have more legs?
3. ServiceNow, Inc. (NOW - Free Report)
ServiceNow has been a winning stock for years, with shares up 229% over the last 5 years. That easily beats the S&P 500’s return of 78%. Shares of ServiceNow have also gained big in the last year, adding 68.8%.
What signals are the Fibonacci levels sending traders on ServiceNow today?
4. Snap Inc. (SNAP - Free Report)
Snap shares plunged recently after a disappointing earnings report, falling 32.2% over the last month. Over the last year, shares of Snap have moved in a narrow trading range and were up, but just 4.6%.
It’s not as easy to deploy the Fibonacci levels on stocks with less volatility and narrow trading ranges but Jeremy shows examples of where the Fib levels would be.
Should traders avoid stocks like Snap that have broken down?
5. PayPal Holdings, Inc. (PYPL - Free Report)
PayPal Holdings has fallen 27.9% over the last year. It’s also down 4.5% over the last month.
Analysts have been cutting their 2024 earnings estimates over the last week. PayPal is now a Zacks Rank #5 (Strong Sell).
Even as PayPal shares sink, do the Fibonacci levels indicate more pain may be coming?
What Else do you Need to Know About Fibonacci Levels?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of SMCI in Zacks Insider Trader portfolio.]