By: Zach Williams (Financials Group) DFS Buy Pitch By: Zach Williams (Financials Group)
What/Who is DFS? Discover Financial Services, operates as a credit card issuer and electronic payment services company primarily in the United States. The company offers Discover Card-branded credit cards to individuals and small businesses over the Discover Network. It also provides other consumer products and services, including personal loans, student loans, and prepaid cards, as well as deposit products, such as certificates of deposit, money market accounts, online savings accounts, and individual retirement accounts. In addition, the company offers ATM, debit, and electronic funds transfer network; payments network; and credit, debit, and prepaid cards issued by third parties. Discover Financial Services was founded in 1986.
Quick Financial Overview Market cap: 9.55B Income: 652.12M Employees: 10,500 Trailing (forward) P/E: 14.57 (9.85) ROE: 10.59% Revenue: 2.94B Total Cash: 7.92B Beta: 1.61
Technical Analysis What is TA? Fundamental Analysis a security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Fundamental Analysis involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets.
Charts used in TA Different types of charts Types of TA Line Bar Candlestick Point and Figure (X’s and O’s) Types of TA Support and Resistance Head and Shoulders/ Cup and Handle/ Wedge Simple Moving Averages
Support A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely to continue dropping until it finds another support level.
Resistance A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level.
Psychology Behind S&R Support and resistance levels are formed by supply and demand There is a high demand at support levels, meaning many buyers are willing to buy at that price On the other side, the supply is very high at resistance levels, meaning many sellers are willing to sell at that price. When support and resistance trading levels are broken, the market psychology behind the movement shifts and new support/ resistance levels will be established.
Example
SIC Example- TD Bank
DFS Line Chart- 2 year
DFS Candlestick Chart
DFS- Just over 1 year $17.05 $16.50
3 Month Chart
Proposed Trade DFS close as of 10/20: $17.54 Buy DFS (Short term position of $8,000) Stop Loss- A stop order for which the specified price is below the current market price and the order is to sell. Stop loss at $16.00 (~9% loss) A limit order is an order to buy a security at not more, or sell at not less, than a specific price. A sell limit order can only be executed at the limit price or higher Sell limit at $21.50 (23% gain)