What a wild ride it’s been these last few days. First, Treasury Secretary Mnuchin claimed that a trade deal was almost finalized before negotiations fell apart in May.
Then, just a day later, “sources” cited by a CNBC reporter said that an agreement at the G-20 Summit between Xi and Trump was highly unlikely.
And as of this morning, yet another “source close to the White House” says that Trump won’t need any more concessions from the Chinese to sign a ceasefire.
What the heck is going on in D.C.?
As usual, unnamed “sources” have the mainstream media running in circles. The market, meanwhile, doesn’t know what to make of it. It seems that these days, unless it comes from POTUS himself (or his Twitter account), you can’t take any trade war news seriously.
But that doesn’t bother short-term, technical analysts like us, right? After all, we’re used to playing out multiple scenarios in our heads when it comes to picking trades.
“What if situations” are our specialty. If a stock runs past resistance, we’ll buy it.
If it drops below support, we’ll short it like no tomorrow.
So, here’s another “what if” for you:
What if Trump strikes a trade deal – or at the very least, a truce – with Xi this weekend at the G-20 Summit?
The smart money would head to tariff-sensitive American blue-chips like Apple (NASDAQ: AAPL).
But as it stands, AAPL shares look a little overbought already. Jumping in at this point, in my opinion, would simply be too dangerous.
So what else is there? Semiconductors?
We’ve already covered plenty of those this week.
Instead, I want to shift our focus to a Chinese company in a niche industry with plenty of upwards potential.
Ctrip.com International (NASDAQ: CTRP) is, believe it or not, an online travel agent stock. The company handles guided tours, corporate events, and vacation bookings – something many analysts thought would grow increasingly redundant over time as travel websites offered more and more agency to users.
But CTRP investors don’t care. It’s the biggest online travel agency in China, and apparently, doing quite well.
Especially now that a trade war truce is on the table.
And looking at the weekly candlestick chart, you can see that CTRP’s in great position to rally. Perhaps even without a full-fledged trade deal.
Stochastics are buried, suggesting that shares remain oversold despite the recent higher low set three weeks ago. More importantly, however, is the price action of the last 6 bars. You’ve got 4 red candlesticks in a row, followed by two green candlesticks, creating an ideal “U” formation over the last month and a half.
Should CTRP escape the 6-bar high by 0.50% ($38.30), I would have no problem going long. The current weekly candlestick still has today’s trading session before it closes, but it appears as though that the 6-bar high will stick. If it doesn’t, just adjust your trade trigger accordingly this weekend.
But outside of the current setup, you can go back a few months and see just how well CTRP has “played by the rules”. It had a fantastic short setup in June last year, followed by an opportunity to go long in November. Then, in May of this year, there was yet another setup to go short.
We could’ve traded this stock up and down for more than a year, collecting 3 massive winners in a row.
Sounds pretty good, doesn’t it?
And based on what the chart is giving us this week, it looks like CTRP could be setting up for another big move.
Even if Trump and Xi don’t “make up” tomorrow in Japan.
