Plus500 share price shoots up despite CMC Markets warning

Plus500 (LON: PLUS) share price went vertical even as concerns about the online trading companies retreated. The stock jumped by more than 8% on Tuesday, making it the best-performing company in the FTSE 250 index. CMC Markets, on the other hand, saw its shares plunge by over 4.36%, making it the worst-performing FTSE 250 index.

Online trading conditions ease

Plus500 is a leading company that provides trading services to hundreds of customers from around the world. Its key products are forex, CFDs indices CFDs, commodity CFDs, share CFDs, option CFDs, exchange-traded fund (ETF) CFDs, and cryptocurrency CFDs, among others. 

Plus500 competes with other London-listed companies like CMC Markets and IG Group. Therefore, trading conditions in one of these companies could serve as an indicator for the entire sector. 

On Tuesday, CMC Markets published relatively weak financial results. The results showed that the company’s trading net revenue reached £233 million in the first quarter. Its net investing revenue fell by 21% to £37.6 million. Most importantly, CMC Markets said that the number of customers in its platform dropped during the quarter because of “unfavorable market conditions.”

These results differ from what Plus500 published in April. In its Q1, the company’s revenue jumped by 64% to over £207.9 million. The number of new customers in its platform in the first quarter rose by 10% to 28,201. Total customers jumped by 5% 137,053. Therefore, these results imply that Plus500 is doing better than CMC Markets. 

Plus500 share price forecast

PLUS chart by TradingView

The daily chart shows that the PLUS stock price has been in a strong bearish trend in the past few months. This decline started when the shares peaked at 1,950p on February 6th, when it formed a double-top pattern. In price action analysis, this pattern is usually a bearish sign. 

Since then, the shares have plunged by over 23% from the highest point this year. The stock has dropped below the 25-day and 50-day volume-weighted moving averages (VWMA). This is a signal that bears are still in control.

The MACD is below the neutral point. Therefore, despite the jump on Tuesday, the outlook of the stock is bearish, with the next level to watch being at 1,300p. This view will be confirmed if the price moves below the important support at 1,382p, the lowest level this week.