DailyPlay – Discover Financial Services (DFS) – December 29th, 2021

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The bearish DailyPlay for Wednesday, December 29th is Discover Financial Services (DFS). DFS is part of the Financials sector that has rallied to an area of resistance near $40 and is showing signs of slowing short-term momentum.  

Technical View

• After rallying in recent weeks, momentum is slowing as price once again rejects the 55 D EMA providing a good risk/reward bearish opportunity.  
• Neutral 6M trend
• Neutral Technical Score (6 out of 10) 

Fundamental View

• DFS is significantly overvalued relative to peers with a PE ratio of 32. 
• Sub-industry outlook remains negative for consumer finance as the phasing out of stimulus is expected to add pressure for this sub-industry. 
• Earnings: Jan 19, 2022 (21 days)

As this is a Credit Spread, look to take profits at 50% gain and cut losses at 100%:

Take Profits: $2.05 Debit

Stop Loss: $8.20 Debit

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