After a disappointing Santa Rally, markets are rebounding, with vital macroeconomic data expected next week, including CPI and PPI, which could cause volatility. Signs suggest the market’s downturn from late December is approaching its end, particularly with the tech sector’s strength led by Nvidia. One notable stock is MongoDB (MDB), which is showing a classic mean reversion setup. This is characterized by two key technical indicators: the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD). Currently, MDB’s RSI is dropping below 30, indicating it is oversold, and traders are looking for it to rise above this level for a bullish signal. Although a MACD crossover hasn’t occurred yet, it’s imminent, which would further support a bullish stance. A bull call spread strategy is proposed: buying a $250 call and selling a $255 call, expiring on February 7. If MDB closes at or above $255 at expiration, it promises a 100% return on investment, offering a controlled risk-reward profile. This straightforward approach aims to leverage MDB’s potential bullish momentum effectively.
